Paramount Tells Lawmakers That Netflix-WBD Merger Is “Presumptively Unlawful”

On the day that Warner Bros. Discovery‘s board announced its rejection of Paramount‘s latest bid, the David Ellison-led conglomerate took its argument to Capitol Hill.

In a letter filed with a House Judiciary antitrust subcommittee on Wednesday, Paramount’s chief legal officer, Makan Delrahim, wrote to lawmakers that the Netflix-WBD combination was “presumptively unlawful.”

Delrahim wrote that Netflix’s proposed acquisition of Warner Bros. Discovery assets was “presumptively unlawful,” arguing that it would “further cement its dominance in streaming video on demand.”

The letter was filed with the committee on the same day that it held a hearing on the streaming market, with the sale of WBD a primary topic of discussion among lawmakers and the expert witnesses. A frequent point made during the hearing was that much will depend on how the government ultimately defines the relative market, i.e. whether Netflix competes in a narrow world of subscription streaming for premium content, or a much wider landscape that includes YouTube and social media.

Delrahim said that the broader market definition was “tortured and absurd” and something that “no serious regulator would ever accept.”

He wrote, “It asserts, for example, that free, user-generated videos on YouTube and TikTok should be considered an adequate substitute for premium produced content available on Netflix or HBO Max. This is what some call ‘psychedelic antitrust’ — it has no ground in market or legal reality.”

Delrahim argued that Netflix had previously dismissed the idea that YouTube was a rival. pointing to securities filings in which “it compared itself to actual competitors in streaming video on demand.”

Delrahim led the Justice Department’s antitrust division during Donald Trump’s first term.

A Netflix spokesperson did not immediately respond to a request for comment. The Wrap first reported on the filing, which was made with little fanfare as attention focused on what may be Paramount’s next step as it seeks to win a hostile bid for all of WBD.

Last month, Warner Bros. Discovery entered into a deal with Netflix, with the latter buying the studio and streaming assets, and the WBD cable channels spun off into a separate company.

Congressional lawmakers have oversight over the Justice Department, but no direct authority in whether the transaction is approved or rejected. The regulatory review also will include European regulators and state attorneys general.