Antitrust agencies were right to suspect that Netflix’s bid for Warner Bros. Discovery would have harmed consumers, content creators, and rival streaming platforms. They needed the consumer welfare standard to show how, writes Sean D. Reyes.
Antitrust enforcement is not supposed to stop every deal. It is supposed to stop the bad ones. The bidding war for Warner Bros. Discovery (WBD) proves the system can still work.
After months of bipartisan pressure, which included a letter from a coalition of former state attorneys general that I signed, and a formal Department of Justice investigation into whether Netflix’s proposed $83 billion acquisition would substantially lessen competition or tend to create a monopoly in violation of Section 7 of the Clayton Act and Section 2 of the Sherman Act, Netflix walked away. Paramount Skydance stepped in with an approximately $111 billion offer for the entirety of WBD—and it presents a fundamentally different antitrust profile.
This is exactly how the consumer welfare standard and its focus on prices, output, and innovation should operate. Over the last few years, regulators who believe antitrust enforcement has been too lax have blamed the consumer welfare standard and sought to refocus merger rules and analysis to deter mergers and acquisitions outright. However, the goal of antitrust is not to punish scale or block all acquisitions. It is to distinguish transactions that harm consumers from those that benefit them. The Netflix-WBD combination failed that test. A Paramount-WBD deal has a credible case that it passes.
Why Netflix-WBD triggered the presumption
Start where antitrust analysis usually starts, a point with which the consumer welfare standard’s critics can agree: market share. The Supreme Court’s 1963 decision inUnited States v. Philadelphia National Bank established that mergers producing a firm controlling 30% or more of a relevant market are presumptively anticompetitive under Section 7 of the Clayton Act. Using share of total streaming hours watched—a metric the D.C. district court endorsed as probative of market power in the recent FTC v. Meta Platforms, Inc. case—Netflix commands roughly 20% of the market for subscription streaming services and HBO Max approximately 15%. Combined, they would have exceeded the 30% threshold established in Philadelphia National Bank, landing squarely in the presumptive danger zone.
Paramount+ accounts for roughly 7% of streaming hours. A combined Paramount-WBD entity would control approximately 22% of the market—well below the threshold that triggers the structural presumption of illegality. Regulators would face a substantially higher burden to demonstrate competitive harm.
However, market share alone does not tell the whole story. This is where the consumer welfare standard remains relevant. The DOJ’s civil investigative demands, issued under the Antitrust Civil Process Act, explored whether Netflix wielded anticompetitive leverage over content creators in programming negotiations. That concern is intuitive: Netflix is the dominant subscription streaming platform with over 300 million global subscribers. Handing it exclusive control of Warner Bros.’ content library—including HBO, the DC Universe, and Harry Potter—would have given the market leader an unprecedented ability to foreclose rivals by, for example, blocking access to redistributing Warner Bros.’ popular content. As Kansas Senator Roger Marshall warned in his November 2025 letter to the DOJ and Federal Trade Commission, the deal risked enabling Netflix to raise prices, restrict output, reduce content variety, curtail theatrical windows, and reduce investment in large-scale productions.
Why Paramount-WBD is different
Paramount presents none of these structural risks. It is a traditional studio, not a dominant distribution platform. Its streaming footprint is smaller, which means a merger with WBD wouldn’t supercharge an incumbent market leader the way an acquisition by Netflix would. Paramount has historically licensed content broadly across rival platforms, reducing the concerns about the risk of foreclosure that animated the DOJ’s Netflix inquiry. And because the Paramount-WBD transaction would not require the transfer of broadcast licenses, the Federal Communications Commission need not conduct a full review—a point FCC Chairman Brendan Carr acknowledged when he called the deal “cleaner” and predicted it would be approved quickly.
The vertical integration dimension matters too. Netflix primarily operates as a global streaming platform. Acquiring WBD would have significantly expanded its control over both content production and distribution—precisely the kind of vertical consolidation that raises foreclosure concerns under modern antitrust analysis. Paramount, by contrast, is already a traditional film and television studio with existing production and distribution operations. Combining Paramount and WBD would largely consolidate two studios rather than hand a dominant platform even greater control over the content supply chain.
Perhaps most importantly from a competition standpoint, Paramount-WBD would create a stronger challenger to Netflix, Amazon, and Disney—the three biggest streaming platforms—rather than further entrench the market leader. A combined Paramount+ and HBO Max would field approximately 200 million subscribers—a credible counterweight to Netflix’s 300 million, Amazon Prime Video’s 220 million, and Disney+/Hulu’s 196 million. The combined entity’s complementary intellectual property portfolios—from Nickelodeon to Cartoon Network, from Paramount’s live sports properties to WBD’s existing partnerships and gaming deals—would give consumers more content, more subscription options, and more viewing choices. The merged entity could stabilize streaming prices, drive new content investment, and compete more effectively for creators and talent, precisely the kind of procompetitive outcome the consumer welfare standard is designed to permit.
Paramount’s regulatory posture further distinguishes it from Netflix. After filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Paramount Skydance certified compliance with the DOJ’s December 23, 2025 Second Request for Information, and the 10-day statutory waiting period expired on February 19, 2026—meaning there is no current statutory impediment under U.S. law to closing the transaction. The DOJ, by contrast, opened an expansive investigation into whether the Netflix deal would violate the Clayton and Sherman Acts. That asymmetry is telling.
None of this means a Paramount-WBD merger should be without scrutiny. California’s attorney general has opened an investigation. European regulators may conduct their own review. And horizontal overlap in cable television, sports rights, and news warrants careful analysis. But the threshold question in any merger review is whether the combination threatens the kind of consumer harm—higher prices, reduced output, diminished innovation—that antitrust law exists to prevent. By that standard, Paramount-WBD and Netflix-WBD are not comparable.
The consumer welfare standard is not anti-merger. It is anti-harm. When antitrust enforcement credibly deters a transaction that would have vaulted the market’s dominant player past the Philadelphia National Bank presumption—and the alternative is a combination that strengthens a mid-tier competitor and stays well below that line—the standard has done precisely what it was designed to do. Paramount should clear antitrust review. Netflix was right not to.
Author Disclosure: Sean D. Reyes served as the attorney general for Utah from 2013-2025. The author reports no conflicts of interest. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
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