In a recent RealClearMarkets column, Charles Sauer explains why Netflix’s proposed acquisition of Warner Bros. should be approved—and why it highlights the failure of outdated antitrust thinking in a fast-moving entertainment market.
Netflix appears poised to acquire Warner Bros. despite a hostile takeover bid from Paramount Pictures. While the deal still requires government approval, Sauer argues it offers the Justice Department an opportunity to finally repudiate the 1948 Paramount consent decree, which no longer reflects how the entertainment industry works.
“Now Deputy AG Slater can show that the Trump Administration understands that antitrust laws are a poor substitute for technological change.”
A Failed Experiment in Antitrust
The Paramount consent decree was meant to increase competition by forcing major studios to divest their movie theaters. Instead, ticket prices rose, fewer movies were produced, and theaters were pushed to rely on expensive concessions to stay profitable.
“Things did not work out that way, as ticket prices increased and fewer movies were produced after the consent decree.”
Rather than benefiting consumers, the decree distorted incentives across the industry.
Innovation, Not Regulation, Drives Competition
Ironically, studios originally integrated vertically to challenge the Motion Picture Patents Company, which attempted to monopolize filmmaking through aggressive patent enforcement. Consumers ultimately rejected that cartel by choosing longer, scripted films—demonstrating that innovation, not regulation, is what breaks monopolies.
That same dynamic is playing out today.
Streaming Is Intensely Competitive
Mergers and acquisitions in streaming reflect competition, not consolidation. Amazon’s purchase of MGM and Disney’s acquisition of Fox expanded consumer choice and strengthened content libraries. Netflix’s acquisition of Warner Bros. would similarly allow the company to expand original content, connect streaming with theatrical releases, and bundle services in ways that benefit consumers.
With countless streaming options available—and most consumers subscribing to multiple services—no single company can exercise monopoly power.
Competition Goes Beyond Hollywood
Streaming services also face competition from platforms like YouTube, TikTok, and Facebook, where user-generated content often rivals or surpasses studio productions. Advances in artificial intelligence are only accelerating this trend, lowering barriers to entry and increasing creative competition.
The Right Outcome
A federal court ended the Paramount consent decree in 2020 after recognizing it was obsolete. Approving Netflix’s purchase of Warner Bros. would reinforce a simple reality: antitrust laws cannot substitute for technological change or consumer choice.
Markets evolve. Innovation wins. Consumers decide.
Read more at RealClearMarkets by clicking here.
