Netflix’s $72 billion acquisition of Warner Bros raises market share concerns, leading to price target cuts and antitrust scrutiny from lawmakers and analysts
NETFLIX’S $72 billion Warner Bros deal led to several price target cuts by Wall Street analysts as U.S. President Donald Trump warned of market-share concerns, underscoring the tough scrutiny that the acquisition is likely to face.
The deal that combines the world’s largest streaming service with HBO Max and a major Hollywood studio has also drawn criticism from bipartisan lawmakers and unions on concerns it could lead to job cuts and higher prices for consumers.
Trump warned on Sunday while speaking at the Kennedy Center that the combined group’s enlarged market share “could be a problem” and that he will be involved in the decision.
Netflix has agreed to a $5.8 billion termination fee if it cannot obtain regulatory approval, in a sign of confidence of a greenlight.
To ease concerns of market concentration, it is likely to argue that the market for online video also includes YouTube and TikTok – two of the most popular platforms with hundreds of millions of users.
“Antitrust opposition stalls consummation of the deal for a couple of years, and raises at least an element of risk about completion,” said Rosenblatt analyst Barton Crockett.
Hollywood unions have voiced concerns about increased market concentration, reduced film output and the potential for higher consumer costs.
Rival bidder Paramount Skydance has said the deal process was biased, raising chances of a higher bid or a hostile takeover.
The political dynamics may be further complicated by Warner Bros Discovery’s rejection of Paramount Skydance, a studio with Trump connections, in favor of Netflix, analysts said.
At least three brokerages cut their price targets for Netflix, with consensus median price target now at $139, according to data compiled by LSEG. – Reuters
