Growing regulatory scrutiny is surrounding Netflix’s proposed acquisition of Warner Bros.’ film and television studios and the HBO Max streaming business, after the chairman of a key Senate antitrust panel warned the transaction could weaken competition across the global streaming market.

Sen. Mike Lee of Utah, who chairs the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, sent a formal letter to executives at both companies raising concerns that the deal could reduce consumer choice, distort market competition, and potentially allow sensitive competitive data to be misused during the review process.

The deal, which values the transaction at roughly $72 billion and would see Netflix pay $27.75 per share in cash, would create one of the largest vertically integrated streaming and content empires in the world. Regulators, rival media companies, and investors are now watching closely as the Justice Department prepares to conduct a detailed antitrust review.

Sen. Mike Lee Warns of Serious Antitrust Issues

In his letter to Netflix co chief executives Ted Sarandos and Greg Peters, along with Warner Discovery chief executive David Zaslav, Lee said the proposed acquisition “appears likely to raise serious antitrust issues, including the risk of substantially lessening competition in streaming markets.”

Lee also cautioned that even if the transaction is never finalized, the process itself could still damage competitive dynamics. He highlighted concerns about companies gaining access to sensitive competitive information during merger negotiations.

The senator said the deal “raises concerns about potential abuse of the merger review process,” particularly if an acquirer obtains “competitively sensitive information under the guise of due diligence.”

Lee has positioned himself as one of the more aggressive voices in Washington when it comes to policing consolidation in technology and media industries. As streaming platforms increasingly dominate global entertainment distribution, regulators are becoming more focused on how consolidation could impact pricing, content diversity, and independent creators.

Hearing Scheduled as Justice Department Reviews the Deal

A subcommittee hearing on the proposed Netflix Warner transaction is scheduled for Feb. 3, placing the deal directly under congressional spotlight. While the Senate can raise concerns and influence public opinion, the Justice Department ultimately holds authority over whether the transaction can proceed.

Antitrust regulators will examine whether combining Netflix’s massive subscriber base and data capabilities with Warner’s premium content library and production infrastructure could create an unfair competitive advantage over rivals such as Disney, Amazon Prime Video, Apple TV+, and regional streaming platforms.

Regulators are expected to analyze issues such as:

Market concentration in subscription streaming services
Control over premium film and television intellectual property
Potential barriers to entry for smaller streaming competitors
Pricing power and consumer choice
Advertising and data monetization leverage

With streaming profitability already under pressure across the industry, regulators may be especially sensitive to any deal that could further consolidate pricing power.

“Killer Non Acquisition” Risk Highlighted

One of Lee’s most pointed warnings centered on what he described as a potential “killer non acquisition” scenario. In his letter, Lee said he was concerned the deal “could operate as a so called ‘killer non acquisition,’ effectively weakening a major competitor through the pendency of the merger review process.”

This refers to situations where prolonged merger talks distract or destabilize a competitor, delay investment decisions, or suppress competitive behavior even if the transaction ultimately collapses.

For investors, this creates a unique risk profile. Prolonged regulatory uncertainty can weigh on stock performance, disrupt strategic planning, and increase volatility in both acquiring and target companies.

Paramount Enters the Picture With Rival Bid

Complicating matters further, Paramount has launched a rival hostile bid for all of Warner Discovery, including its cable network portfolio which includes CNN, TNT, Food Network, and other major brands. Paramount’s all cash offer values Warner Discovery at approximately $77.9 billion, higher than Netflix’s proposed valuation.

Paramount has already made a tender offer to Warner shareholders and recently extended its deadline to Feb. 20. Warner’s board has encouraged shareholders to reject Paramount’s offer, signaling its preference for the Netflix deal.

As Paramount pushes its competing bid, it has argued that a Netflix HBO Max combination would raise anticompetitive issues both in the United States and internationally. That messaging aligns closely with Lee’s concerns and could influence regulatory sentiment.

The Justice Department is now reviewing both transactions simultaneously, adding further complexity and potential delay to any final resolution.

Company Responses Remain Measured

Warner responded cautiously to Lee’s letter, emphasizing compliance with regulatory standards. A Warner spokesman said the company is “complying with all relevant laws in its dealings with Netflix.”

Netflix declined to comment publicly on the matter.

Both companies have previously expressed confidence that the transaction will ultimately receive regulatory approval, although recent antitrust enforcement trends suggest the review could be lengthy and contentious.

Over the past several years, U.S. regulators have taken a tougher stance on large mergers across technology, healthcare, telecommunications, and media. The Biden era antitrust framework has empowered agencies to challenge deals that previously may have cleared with minimal resistance. Even under shifting political leadership, bipartisan concern over corporate concentration has remained strong.

Lee Has Long Opposed the Combination

Sen. Lee’s skepticism did not emerge only after the deal announcement. He had publicly criticized the idea of a Netflix Warner tie up beforehand. Posting on X prior to the transaction, Lee said the merger “would mean the end of the Golden Age of streaming for content creators and consumers.”

That view reflects a broader concern among policymakers that streaming consolidation could reduce competition for creative talent, limit distribution channels for independent producers, and drive subscription prices higher for consumers.

Broader Industry Context and Market Implications

The streaming industry is undergoing a significant reset. Subscriber growth has slowed across mature markets, content costs remain elevated, and profitability pressures are intensifying. Companies are increasingly exploring consolidation, advertising driven revenue models, and international expansion to stabilize margins.

A Netflix Warner combination would reshape the competitive landscape by merging Netflix’s global distribution scale with Warner’s deep content catalog, including HBO franchises, Warner Bros. film libraries, and major television properties.

However, regulators may view that scale as precisely the problem.

If approved, the deal could accelerate consolidation across the sector as rivals seek defensive mergers of their own. If blocked, it may signal a tougher regulatory environment that limits large scale media consolidation for years to come.

What Investors Should Watch Next

Investors tracking Netflix, Warner Discovery, and Paramount should monitor several key developments:

The outcome and tone of the Feb. 3 Senate subcommittee hearing
Signals from the Justice Department regarding the depth of its antitrust review
Any concessions, divestitures, or structural remedies proposed by the companies
Shareholder response to Paramount’s hostile tender offer
Market volatility tied to regulatory headlines

Short term price swings are likely as regulatory news emerges. Longer term, the outcome could influence strategic direction across the entire streaming and media sector.

For investors, this is not just about one deal. It is about how aggressively regulators intend to shape the future of digital media consolidation, competition, and consumer pricing power in the years ahead.