Netflix is mounting its defense against challenges to its proposed acquisition of Warner Bros Discovery, arguing that the acquisition is necessary to compete with YouTube. However, many in the space doubt that enforcers, who are already scrutinizing the deal, will buy that argument and view Netflix and YouTube as interchangeable rivals, given their different content, audiences, and business models.
“Netflix is going to have a difficult time making arguments that YouTube is substitutable for the kind of content that’s on HBO Max and Netflix,” said Robin Crauthers, a McCarter partner and former DOJ antitrust attorney.
Netflix has also argued that the deal would bring down prices for the vast majority of HBO Max subscribers, who are already Netflix customers, by allowing the company to bundle the two products. Robin noted that this argument is also unlikely to sway enforcers as the DOJ is very skeptical of claims that mergers bring cost savings that will find their way back to consumers, and will also consider whether the deal would allow Netflix to raise prices on subscribers who do not take both services.