Deadline reported that Paramount has released a letter to the Department of Justice concerning streaming platform Netflix, alleging that the streamer was campaigning against the proposed Paramount and Warner Bros. Discovery merger that has been in discussion for the last few months. This statement comes amidst the deal’s limbo status in regulatory review.
From Deadline, Paramount’s Chief Legal Office Makan Delrahim wrote to the DOJ’s Antitrust Division:
“As Paramount pushes forward with its ‘content-first’ growth strategy, firms like Netflix, Amazon MGM, Disney, Universal, Sony, Lionsgate, A24, Apple, and many others will need to respond in kind, presumably by enhancing their own content creation strategies. (Indeed, Netflix’s panic-level response and scorched-earth campaign to try and poison regulators and other stakeholders against the Transaction shows just how seriously Netflix takes Paramount as a scaled competitor.)”
The letter in totality is a defense in favor of the merger, claiming that the movement would lead to overall increased content production along with a more competitive landscape in the broadcast entertainment industry. Delrahim highlighted, in particular, the opportunity of the merger to benefit organized labor and labor unions within the industry. In turn, he rejected the prevailing critical narrative that has audiences concerned about debt/spending and job cuts in an already starving industry, claiming and alleging that “rivals are pushing [the narrative] to undermine the Par-WBD deal” in drawing comparisons to the 2019 Disney-Fox merger.
On the topic, from Deadline:
“We understand that as part of its broader proxy war against the Transaction, Netflix has tried to persuade the Teamsters and other stakeholders that Disney’s acquisition of Fox had a negative impact on content production and labor opportunities. Frankly, Netflix’s ‘sky is falling’ narrative departs significantly from the ground-truth reality of what actually happened.”
Continuing, a Netflix spokesperson spoke to Deadline (who noted how the letter did not detail specific citation of actions taken by Netflix or others):
“These claims from Paramount Skydance are absurd. We walked away from this deal months ago and remain focused on our own business, not theirs. Ultimately, it’s up to the regulators to approve this deal and determine if it is in the best interest of the industry and all concerned.”
As detailed by Deadline, WBD originally had an agreement to sell its streaming operations and studio to Netflix, but Paramount swiftly came into the picture with new leadership David Ellison offering new deal. The Warner board ultimately ditched Netflix for what it judged to be a better offer from the Ellisons, walking away from the plan with a fee of $2.8 billion.
Currently, the merger is in limbo with an antitrust suit from April of this year and formal investigation by the UK’s antitrust authority, leaving many wondering what might come next after this turn of events.