Ted Cruz on the Netflix-Warner Brothers/Discovery merger

In late 2025, Warner Bros. Discovery (WBD)—formed from the 2022 merger of WarnerMedia and Discovery—shifted away from plans to split into separate streaming/studios and linear networks companies. Instead, it opened itself to acquisition offers amid financial pressures.

Netflix emerged as the frontrunner after a bidding process involving companies like Comcast and Paramount Skydance. On December 5, 2025, Netflix announced a definitive agreement to acquire WBD’s streaming and studios division (including Warner Bros. Pictures, Warner Bros. Television, HBO, HBO Max, DC Studios, and a vast media library) for an enterprise value of approximately $82.7 billion (equity value $72 billion), initially structured as cash and stock at $27.75 per WBD share. This deal preserved WBD’s plan to spin off its Global Linear Networks (cable channels like Discovery) as “Discovery Global” in Q3 2026.

A rival bid came from Paramount Skydance on December 8, 2025, offering an all-cash hostile takeover of the entire WBD at a higher valuation ($108.4 billion at $30 per share). Netflix responded by amending the agreement in January 2026 to an all-cash structure at the same price, providing more certainty for WBD shareholders and accelerating a vote (potentially by April 2026). WBD’s board has repeatedly backed Netflix’s deal and urged rejection of Paramount’s offer.

The proposed acquisition would combine Netflix’s global streaming dominance (over 300 million subscribers) with Warner Bros.’ iconic franchises (e.g., Harry Potter, DC Universe, Game of Thrones, Friends) and HBO’s prestige content, aiming to create a stronger entertainment powerhouse. Netflix executives, including co-CEO Ted Sarandos, argue it will deliver “more content for less,” boost U.S. production, and benefit Hollywood jobs, emphasizing complementary (not directly competitive) services—80% of HBO Max users also subscribe to Netflix.

However, the deal faces significant scrutiny. A U.S. Senate Judiciary Subcommittee hearing today, saw bipartisan concerns over reduced competition, potential price hikes, impacts on cinemas, job losses, and market consolidation (Netflix could control ~30% of U.S. streaming). Lawmakers grilled Sarandos on antitrust risks, content ideology, and consumer effects. The deal is under review by the Department of Justice (DoJ), Federal Trade Commission (via HSR filing), and possibly the European Commission, with closure expected in 12-18 months if approved.