Netflix shares fell 2.1% to $80.44 during Monday's trading session following news that U.S. antitrust regulators are intensifying their examination of the streaming giant's bid for Warner Bros Discovery assets. The Department of Justice has issued a civil subpoena, creating fresh doubts about the transaction's timeline and ultimate approval.
Regulatory Hurdles Emerge
The DOJ's investigation focuses on whether Netflix engaged in potentially anti-competitive behavior during the merger review process. While Netflix maintains it is unaware of any probe beyond standard regulatory procedures, the subpoena requests information about "exclusionary conduct" that could indicate entrenched market power.
Steven Sunshine, counsel for Netflix, characterized the department's actions as routine review steps, noting the company hasn't been notified about any separate monopolization investigation. Netflix stated it is "constructively engaging" with regulators through the process.
Competitive Landscape and Timing Pressures
The regulatory scrutiny arrives as Paramount Global extends its tender offer deadline to February 20, while Warner Bros could schedule a shareholder vote on the Netflix deal as early as March. The DOJ is simultaneously evaluating a competing offer from Paramount Skydance, further complicating the acquisition landscape.
For investors, the primary concerns involve potential regulatory concessions that might diminish the transaction's value, possible legal challenges that could block the deal entirely, or extended review periods that would increase costs and management distraction.
The market reaction reflects broader investor caution toward complex, high-volatility transactions following recent market swings. Netflix's 2026 strategic outlook now hinges significantly on whether it can successfully integrate Warner Bros' studio assets and streaming catalog without protracted regulatory battles.
Attention now shifts to regulatory signals from the DOJ regarding the scope of its review, Paramount's progress before the February 20 deadline, and Warner Bros' confirmation of a March shareholder vote date.
