The Department of Justice has dramatically escalated its scrutiny of Netflix’s proposed $72 billion takeover of Warner Bros. Discovery, and new details reveal that the probe goes far beyond a routine merger review. At the heart of the investigation is a serious question: does Netflix’s power over filmmakers and independent studios violate Section 7 of the Clayton Act — and possibly even the Sherman Act? What began as a standard antitrust review of the Warner deal has evolved into one of the most aggressive government examinations of a media merger in recent history.
Want to stay ahead of how this landmark case could reshape Hollywood? Keep reading — this one matters.
What the DOJ Is Actually Investigating
The Justice Department sent a civil investigative demand — essentially an administrative subpoena — to at least one independent movie studio in connection with its review of the Netflix-Warner Bros. Discovery merger. The language inside that document is significant. Regulators are asking whether the deal “may substantially lessen competition or tend to create a monopoly” in violation of both Section 7 of the Clayton Act and Section 2 of the Sherman Act.
This dual-statute approach is unusual. Merger reviews are almost always handled exclusively under the Clayton Act, which was written specifically to evaluate consolidations before they happen. The Sherman Act, by contrast, is a tool typically reserved for targeting companies already engaged in illegal monopolistic behavior — think Google, Live Nation, or Visa. The fact that both laws are now in play signals that the DOJ believes Netflix may already be exercising a level of market power that crosses legal lines, independent of whether this merger goes through.
Netflix’s Grip on Independent Creators Is Under the Microscope
The most striking element of the probe is its focus on how Netflix deals with independent filmmakers and content studios. The DOJ is reportedly asking pointed questions about whether Netflix uses its sheer buying power — it is spending roughly $20 billion on programming this year alone — to pressure independent creators into unfavorable terms.
Netflix is not just the largest paid streaming service in the world. It is also one of the biggest single buyers of film and television content on the planet. That combination gives it enormous leverage over smaller studios and filmmakers who depend on Netflix deals to get their projects made and distributed. If a filmmaker’s project doesn’t get picked up by Netflix, they may struggle to find a viable alternative that offers the same scale of audience and financial backing.
The DOJ’s line of questioning suggests it views this dynamic as potentially anticompetitive. If Netflix can dictate terms to creators because there are few meaningful alternatives, absorbing Warner Bros. Discovery’s production assets and HBO Max would only amplify that leverage — creating an even more dominant buyer in the creator marketplace.
A $72 Billion Deal That Was Never Going to Be Simple
Netflix emerged as the winning bidder for Warner Bros. Discovery in December 2025, outmaneuvering rivals including Paramount and Comcast in a months-long bidding war. The deal is valued at approximately $72 billion, though some estimates put the full figure closer to $82.7 billion depending on how liabilities are structured. It would hand Netflix control over Warner Bros.’ legendary studio assets, its vast content library, and the HBO Max streaming service, which counts nearly 130 million subscribers.
The deal immediately drew opposition from across the political spectrum. Members of Congress from both parties raised concerns. President Trump himself voiced skepticism. Consumer advocacy groups filed lawsuits. An HBO Max subscriber named Michelle Fendelander filed a class-action complaint in December 2025 alleging the merger would violate — specifically — Section 7 of the Clayton Act by eliminating head-to-head competition in the subscription video-on-demand market.
All of that opposition set the stage for a DOJ review that was never going to be routine.
Why the Sherman Act Changes Everything
Adding Section 2 of the Sherman Act to the review is a strategic escalation worth paying close attention to. The Sherman Act requires regulators to prove that a company has achieved or is attempting to achieve monopoly power through exclusionary conduct. That standard is harder to meet than a Clayton Act merger challenge, but it also carries different implications.
If the DOJ pursues a Sherman Act theory, it could argue that Netflix’s current market behavior — before any merger even closes — is already anticompetitive. That means the investigation is not just about whether the Warner deal should be blocked. It could open the door to broader scrutiny of how Netflix operates as a business today, including how it negotiates with studios, sets licensing terms, and controls what content gets made.
This is the same legal framework used against Google in its landmark search monopoly case, against Live Nation in the concert industry, and against Visa in payment processing. Placing Netflix in that category is a statement.
What the Market Concentration Data Actually Shows
Not everyone agrees the government’s case is airtight. Data from Nielsen’s tracking of monthly TV viewing habits, collected through October 2025, showed that Netflix accounted for about 8 percent of total TV viewing time and Warner Bros. Discovery accounted for roughly 5.6 percent. Combined, that’s 13.6 percent — well below the 30 percent structural threshold outlined in the 2023 Merger Guidelines jointly published by the DOJ and Federal Trade Commission.
However, antitrust enforcers are expected to argue for a narrower market definition — focusing specifically on the subscription video-on-demand space rather than all TV viewing combined. In a narrower SVOD market, the combined share of Netflix and Warner Bros. Discovery looks considerably larger and more threatening to competition.
Netflix, for its part, argues in its own annual filings that it competes with a broad set of leisure activities including social media, video gaming, and user-generated content platforms. That argument could cut both ways in court.
The Parallel Paramount Bid Adds Another Layer
Making the situation more complicated is the fact that Paramount has continued pursuing its own bid for Warner Bros. Discovery — even launching what has been described as a hostile takeover attempt after the Warner board rejected its advances. The DOJ is simultaneously reviewing both offers, which means regulators are evaluating two competing visions for what Warner Bros. Discovery’s future looks like and what each would mean for the competitive landscape.
Paramount CEO David Ellison declined an invitation to testify before Congress about the deal, a decision that drew its own set of questions. Meanwhile, the DOJ appears to be using market participants on all sides — studios, filmmakers, distributors — as sources of information to build its picture of how the industry actually works.
What Comes Next
The civil investigative demand sent last week is a clear signal that this review will stretch on for many more months. Netflix argued in recent weeks that the government was conducting nothing more than a standard process. The subpoena’s language — and particularly the inclusion of the Sherman Act — directly contradicts that framing.
Antitrust experts note that even aggressive DOJ reviews do not always result in a lawsuit to block a deal. The department may ultimately seek structural remedies such as targeted divestitures rather than outright blocking the merger. Under the current leadership of the DOJ’s Antitrust Division, structural separation has been the preferred tool in recent major cases, including settlements involving Keysight Technologies and Safran.
For Hollywood, the stakes extend beyond this one deal. A DOJ finding that Netflix already wields illegal monopolistic power over independent creators would send shockwaves through the entire content ecosystem — affecting how studios negotiate, how filmmakers get paid, and how the next generation of storytelling gets funded.
If you have thoughts on what this investigation means for the future of streaming and independent filmmaking, drop them in the comments below — and follow along as this story develops.