The Netflix and Warner Bros Discovery deal came in quicker than expected, but the regulatory part of the agreement may not see such a smooth road, according to a CNBC report.

Netflix on Friday stunned the media when it announced that it had emerged as the winner of a three-way fight to buy Warner Bros Discovery, paying $72 billion for the acquisition of the iconic film studio and its streaming service HBO Max. The combination of the two mammoths in the film and streaming industry is being seen as one of the biggest mergers, bringing together two of the most popular streaming platforms in the business.

As of end-2024, Netflix has reported 300 million global subscribers, while HBO Max had 128 million customers as of September 30.

“This deal cements Netflix’s position as the premier streaming service for original content,” according to a research note from analysts at William Blair.

The sheer size of the Netflix-Warner Bros Discovery deal makes it ripe for scrutiny — from both industry leaders and US lawmakers.

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The Department of Justice is expected to review the Netflix-Warner Bros deal, as it has done with other mergers in the past. This would come amid US lawmakers already calling for an antitrust review, and the combination of both could mean that the $72 billion acquisition could take a long time to close.

Senator Elizabeth Warren, a Democrat from Massachusetts, has already called for an antitrust review.

“This deal looks like an anti-monopoly nightmare. A Netflix-Warner Bros. would create one massive media giant with control of close to half of the streaming market — threatening to force Americans into higher subscription prices and fewer choices over what and how they watch, while putting American workers at risk,” Warren said in a statement on Friday.

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According to the CNBC report, analysts at Deutsche Bank and William Blair were somewhat convinced that the deal will go through.

“A merger of Warner Bros. Discovery and any of the three bidders would probably succeed, even if the DOJ were to sue to block a proposed combination,” Deutsche Bank analysts said in a note.

“However … we don’t know all of the detailed facts that will be collected and analyzed by the DOJ, nor do we know who the judge hearing the case will be, and both of these factors can have an impact on the outcome,” they added.

Questions loom for Netflix

The argument on whether to greenlight Netflix’s proposal to acquire Warner Bros Discovery would hinge on two questions, according to the CNBC report.

The first one is on pricing for consumers, while the second relates to the definition of Netflix’s audience.

Netflix has not always been on the top of its game when it comes to pricing, charging significantly more for its streaming services as compared to peers like Disney.

Also Read | Netflix to acquire Warner Bros’ studio & streaming division for $72 billion

“My expectation on the regulatory side is Netflix is going to advocate and argue with their advisors for a very expansive definition of what their market is … so that would include broadcast, cable, subscription and ad-supported streaming,” Jeff Goldstein, a partner and managing director at AlixPartners, was quoted as saying by CNBC.

On the other hand, YouTube has maintained the top spot in terms of viewership. According to Nielsen’s October report, YouTube had the largest share of TV usage, while Netflix occupied the sixth spot.

Arguments are also likely to hinge on this factor to try to demonstrate outsized dominance, said Goldstein.