One veteran of the Washington regulatory trenches sees no major roadblocks ahead for Netflix’s acquisition of Warner Bros.
“I think the deal gets done,” said Andrew Lipman, a regulatory policy expert and partner at Washington, D.C. law firm Morgan, Lewis & Bockius. Contrary to Paramount‘s assertions in its hostile bid for WBD, he added, “I don’t think it’s that much more complicated or time-consuming than the Paramount deal.”
Lipman made the comments Monday at the UBS Global Media and Communications Conference in New York, on the same stage where Netflix Co-CEOs Greg Peters and Ted Sarandos appeared earlier in the day to make their case for their acquisition.
Paramount and Netflix have been jockeying over the past few days over the bejeweled portfolio of WBD. Netflix last Friday announced that its $82.7 billion proposal (including debt) to acquire WBD’s studios-and-streaming division had been accepted by the WBD board. Paramount, which has raised objections to what it calls unfair aspects of the process, responded Monday by launching a hostile takeover bid, asking shareholders to consider its $108 billion offer for the entire company.
Regulatory review has been at the heart of each company’s pursuit. Paramount insists Netflix’s deal would never gain favor with regulators because it would allow the No. 1 global streamer to add another streaming service and unfairly extend its lead over rivals and add to its leverage over consumers. Lipman gave little credence to that argument.
“The market is more than just, in my mind, streaming,” he said. “It’s eyeballs. It’s YouTube. I mean, Netflix has been losing eyeballs regularly to YouTube. It’s TikTok. It’s Facebook. And God knows who else is on the way. Moreover, the streaming market is dynamic. I mean, the average American these days, believe me or not, has between four and a half or five different streaming services. So, it’s not like a typical market where, you know, you have one gender. And not only that, the ability to switch between streamers is fairly easy, and almost, by definition, cord cutters are the epitome of cost-conscious consumers.”
President Trump’s role in the fate of WBD is unclear. He has said he intends to be involved, which would be a sharp break from the precedent of presidents keeping distance from the regulatory process, but has also insisted that he is not particularly friendly with either company. Lipman said he is often capable of being flexible and transactional in order to get deals done.
Gail Slater, who runs the antitrust division in Trump’s Department of Justice, is a “serious, tough antitrust enforcer,” Lipman said. “This is not the Reagan years, you know, where everything goes. I mean, this is a very rigorous antitrust review.
Slater has assessed 10 to 12 deals this year, approving them after settlement agreements were reached, Lipman noted, and that indicates how the Netflix-WBD proposal could be approved. “She’s open to settlements. And the president, who wrote the famous book, The Art of the Deal, is open to settlement.”
Lipman said he did not expect Trump to move to block the Netflix deal. He cited the president’s decision last June to approve Nippon Steel’s controversial takeover of U.S. Steel, a transaction opposed by the Biden Administration due to national security concerns. The reversal of the government’s stance after an 18-month saga followed promises extracted from Nippon to spend $11 billion on U.S.-based projects.
In the steel review, as in many other matters, “Trump is looking for some equivalent of a ‘golden share’ as a consideration for how to make this deal happen,” Lipman said. Given the $5.8 billion breakup fee included by Netflix in its proposed acquisition, the company and Trump officials “can be pretty creative in structuring that kind of consideration.”
The term “golden share” has been used to describe the steel transaction, a prominent recent instance of the U.S. government gaining authority to oversee certain U.S. assets involved in global transactions. Lipman didn’t elaborate on what such an arrangement might look like in the case of a massive media deal.
Even without knowing the shape of the ultimate deal, though, Lipman expects there to be “behavioral conditions” imposed on the acquiring company. “Netflix has already offered this up, even though it’s not an antitrust issue,” Lipman said. “There’ll be concessions to movie theaters on scheduling and windowing and so forth. You know, there’ll be agreements on, you know, non-discrimination, licensing, and sub-licensing programming. I’m sure there’ll be, as the Europeans would say, ‘cultural issues,’ which means non-American programming.”
Paramount could also end up getting a deal through, should WBD shareholders embrace it or a court order it to happen. In that instance, Comcast’s 2011 deal for NBCUniversal is a relevant comparison, Lipman said, with the focus being on the stable of networks and fair dealings with advertisers, especially around sports, news and children’s programming.
On one intriguing note, Lipman said AI would be “paramount” in the regulatory process. “The pun’s intended,” he said. “It’s gonna be huge. Because if you look at the Google and Meta antitrust cases, AI was huge there. You know, particularly if you’re looking at a product market in mid-2029, I mean, who knows how dynamic AI is going to be?”
