Paramount Accuses Netflix Of Campaign To Derail WBD Merger, Streamer Calls That “Absurd”
Paramount has slammed rival Netflix in a letter to the Department of Justice for campaiging against the Warner Bros. Discovery merger amid regulatory review of the deal the David Ellison company.
“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.),” Makan Delrahim, Par’s Chief Legal Officer, wrote in a letter to the DOJ’s Antitrust Division.
The letter didn’t detail specific actions by Netflix or others. In a statement to Deadline, a Netflix spokesperson disputed the characterization. “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,” the streamer said.
WBD had an agreement to sell its studio and streaming operations to Netflix, but with Paramount in hot pursuit. The Warner board ultimately ditched Netflix for what it judged to be a better offer from the Ellisons. The streamer walked away with a $2.8 billion breakup fee.
The June 5 missive obtained by Deadline was responding to a White Paper the Teamsters submitted to the DOJ in March laying out concerns around the merger, which is awaiting a green light from the regulator. The UK announced this morning it opened a Phase I inquiry of the merger with an August 7 deadline unless it determines a deeper dive is needed. The EU’s initial deadline is July 7 although that could also be extended. News reports over the past few days indicated that Paramount is willing to agree to remedies if needed to get the deal over the finish line.
Par has targeted at least $6 billion in savings from the deal and will carry a heavy debt load if and when it closes, triggering anxiety over job cuts and tighter content spending in an already struggling industry. The company has vigorously pushed pack on that scenario and Delrahim did so again in his letter, insisting the merger, instead, would create a more competitive landscape leading to increased content production overall and “more opportunities for organized labor beyond Paramount’s projects.” “In short, this deal is a win for the Teamsters and other labor unions,” he said.
“Netflix, Amazon, and Disney dominate subscription streaming today. Paramount and WBD both lag far behind the streaming giants—even on a combined basis … For Paramount and WBD to compete, they need to pursue a transformative transaction like this one and invest aggressively in capturing audiences’ attention by driving fresh, engaging content across the ecosystem of theatrical releases, streaming, and linear television.”
The letter said the cost synergies will mostly come from categories “that do not touch production labor or union/guild positions,” including duplicative technology infrastructure; back-office functions like finance, legal, human resources, and corporate communications at the parent company level; “optimizing” the combined firm’s real estate footprint; and more efficient market by coordinating advertising spend and cross-promotion across a broader portfolio of platforms and channels.
Paramount said its projected content spend is expected to increase significantly following the transaction.
Delrahim also rejected comparisons to the Disney-Fox merger in 2019, a narrative he claims rivals are pushing as a way to undermine the Par-WBD deal.
“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.”
Paramount has committed to theatrically release at least 30 feature films annually post-acquisition—at least 15 from each studio—with a minimum 45-day theatrical window.
Politico first reported on the letter.
