Netflix’s co-chief executive Ted Sarandos faced tough questions about whether the streamer is “really awake” or killing competition on Tuesday afternoon during a congressional hearing focused on the pending acquisition of Warner Bros Discovery’s film and streaming assets.
The hearing was held by the Senate subcommittee on antitrust, competition policy, and consumer rights. Bruce Campbell, chief revenue and strategy officer for Warner Bros. Discovery, also testified in a packed Senate hearing.
Both Sarandos and Campbell addressed concerns about how the merger would affect jobs in the entertainment industry, whether it would raise consumer prices for streaming services, whether it would result in less content for users, and whether it would hurt the movie theater business.
“We’re going to operate the WarnerBros studio mostly as it is now,” Sarandos said in response to a question from Democratic senator Adam Schiff about whether the merger would result in layoffs.
Josh Hawley, a Republican Senator, specifically asked Sarandos about the content of Netlix programming, using data that Sarandos said was “inaccurate”. Hawley said he and his wife have to review the Netflix content their children want to watch because “I don’t trust what’s on your platform.”
“Why does so much of Netflix’s content for kids promote a transgender ideology?” Hawley asked. “A huge amount of your children’s programming has this ideology.”
Sarandos said that “Netflix programming has no agenda of any kind,” adding: “We show a wide variety of stories and programs to meet a wide variety of preferences.”
“My concern is that you don’t share my values or those of many American parents,” Hawley said. “I think we should be concerned about what content you’re promoting.”
Eric Schmitt, a Republican senator from Missouri, pressed Sarandos on the donations made by Netflix employees to Democrats and accused him and his company of promoting “DEI and vigilantism”. “A lot of your stuff is amazing,” he added.
“We have no political agenda,” replied Sarandos. “We have tons of Netflix programming, left, right and center.”
When asked by a Democratic senator about concerns that past media mergers have resulted in job losses, Sarandos acknowledged that “most media mergers haven’t been done well” — but said “this media merger is different than any other because we really need these people.”
The subcommittee’s chair, Republican senator Mike Lee, began the hearing by saying the merger raised competition concerns because Netflix would no longer be able to compete with a streaming service it acquired, HBO Max.
“The combined company will have the same incentive and ability to put rivals at a disadvantage,” Lee said in his opening remarks, saying the deal could “further strengthen Netflix’s dominance”. “All told, one could say that Netflix aims to be the online platform to rule them all,” he added.
Republican senator Chuck Grassley said that “this proposed merger could affect prices and options,” saying that his constituents “deserve real competition that keeps prices down” for subscriptions.
In his opening remarks, Sarandos talked about the value of integration and the need to compete in an increasingly competitive market for content.
“With WBD, we can create more economic growth and more value for consumers,” said Sarandos. “We’re going to give consumers more content for less … We’re buying a company that has assets that we don’t have, and we’re going to continue to invest in Warner Bros.”
Originally announced in early December, Netflix upgraded the purchase price in mid-January to make the transaction – worth $82.7bn – all cash.
Paramount Skydance has made several unsuccessful offers for the entirety of Warner Bros. Discovery, including its television assets.
Cory Booker, the top Democrat on the subcommittee, said he invited Paramount Skydance chief executive David Ellison to appear at the hearing but he declined. “Losing Paramount Skydance here is disappointing,” he said, though he thanked Ellison for meeting with him and other senators to discuss his company’s bid.
“The acquisition of WBD by Netflix or Paramount or another company will result in the consolidation of a sector of our economy that has already seen significant consolidation,” Booker said. “With either merger, the other company gets more control over what we see, what we hear and what we use.” (Booker admits to being a Netflix power-watcher, saying he “watches Netflix at times I don’t want to confess in an open hearing”.)
Anti-monopoly groups and veterans in the anti-trust space say Netflix’s acquisition of WBD presents competition concerns that are sure to be closely watched by local and international regulators.
While the justice department’s anti-trust division played the most important role in approving the deal, along with the Federal Trade Commission, state attorneys general could also file lawsuits.
Booker said Tuesday that he hopes antitrust regulators will “review this merger fairly” and without political bias, citing concerns that Donald Trump may seek to interfere inappropriately to pursue changes at media companies he doesn’t like, including the WBD television network CNN.