Netflix’s plan to buy Warner Bros. Discovery’s studio and streaming business is set to reshape the streaming landscape. But is it legal? A new lawsuit claims not.
From Red Envelopes to Streaming
Netflix may be a household name today, but once upon a time it was a DVD‑by‑mail start‑up for film enthusiasts. It gambled pretty big on the idea that (some) people would rather have the specific movie they wanted order online and wait for it to arrive than take whatever was readily available at their local video store. Over time, Netflix built a national subscriber base and amassed detailed data about what those customers watched and liked, as well as the logistics needed to get entertainment into people’s homes efficiently.
That idea didn’t just work; it grew, thanks to the advent of live streaming. Netflix used its early subscriber base and detailed viewing data to launch one of the first large‑scale subscription video‑on‑demand (SVOD) services. By the time other major players arrived, Netflix had already secured significant advantages.
Fast-forward to today: The U.S. SVOD market is currently led by a small group of large services, including Netflix, Amazon Prime Video, Disney+, Hulu, HBO Max (and/or Max, they’ve gone back and forth), and Paramount+. Over the last several years, many of these services have increased their subscription prices and adjusted their plan structures. Several major providers have also introduced or expanded lower‑priced, ad‑supported tiers while raising the prices of their ad‑free plans.
How HBO Became Max
In parallel, HBO evolved from a premium cable channel into a direct‑to‑consumer streaming brand. This happened first through HBO Go (for existing cable subscribers), then HBO Now (a stand‑alone streaming subscription), and ultimately HBO Max, which launched in 2020. HBO Max was built around HBO’s long‑running slate of “prestige” series together with a broader WarnerMedia catalog that includes Warner Bros. films and DC‑branded content.
After AT&T acquired Time Warner, HBO became part of AT&T’s media arm alongside the Warner Bros. film and television studios. AT&T later separated that media business as WarnerMedia and merged it with Discovery, Inc. to form Warner Bros. Discovery (WBD), which then owned both HBO and the Warner Bros. studio. Within this new structure, WBD continued to operate HBO Max as its primary general‑interest streaming service in the United States, built around HBO’s series plus Warner Bros.’ broader film and TV library.
By the mid‑2020s, industry and financial commentators commonly listed Max/HBO Max alongside Netflix and Disney+/Hulu as the major full‑scale SVOD services in the U.S. market, based on its subscriber base and the size of its catalog.
An $83 Billion Acquisition
Earlier this year, WBD conducted a strategic review that included its studio and streaming businesses. Media reports indicated that multiple companies (including Paramount/Skydance and Comcast) expressed interest in some or all of those assets. During this period, WBD also outlined plans to separate its linear networks business into a distinct company.
On December 8, Netflix and WBD announced that they had signed a deal for nearly $83 billion. Under the agreement, Netflix would acquire WBD’s studio and streaming operations for a combination of cash and Netflix stock. The deal is set up so that Netflix will only complete the purchase after WBD first separates its traditional TV channels into a different company, and the acquisition will go forward only if the required shareholder votes are obtained and government regulators approve it.
Concerns from L.A. and D.C.
Public reaction was intense and sharply divided.
Within Hollywood, reaction skewed negative. Unions, directors, and other industry figures publicly worried that the transaction would lead to job losses, fewer independent or “risky” projects, and more pressure on theatrical releases as Netflix gained control of another major studio and its franchises. Trade groups for movie theaters also criticized the deal as a serious threat to the theatrical ecosystem, even as Netflix tried to reassure them that it would keep releasing Warner Bros. films in cinemas.
Media and business commentary focused on scale and precedent. Analysts described the price and scope as unprecedented for a studio acquisition and debated whether the combined company would be an “unbeatable” studio‑streamer hybrid or risk repeating earlier overambitious media mergers. Some consumer‑oriented outlets argued the merger could mean higher prices and less choice for viewers, while others noted the possibility of more bundled offerings and a larger combined library if the deal survives regulatory review.
The issue had such high visibility that politicians and regulators immediately raised antitrust concerns. Members of Congress from both parties warned that combining Netflix with Warner Bros. Discovery’s studio and HBO Max/Max streaming assets could make Netflix too large a player in streaming and reduce competition, signaling that the deal would face heavy regulatory scrutiny.
HBO Subscribers File Lawsuit
Not everyone was willing to wait for regulators to weigh in. Just days after the Netflix–WBD deal was announced, some HBO Max subscribers filed a class-action antitrust lawsuit in federal court. The plaintiff, Michelle Fendelander, is a resident of Las Vegas and a current subscriber to Max. She has never subscribed to Netflix.
Fendelander alleges that the proposed merger violates antitrust law and will harm consumers like herself. According to the complaint, the Netflix–WBD deal would eliminate one of the few major competitors that meaningfully constrains Netflix's behavior in the U.S. SVOD market. Fendelander claims that by combining Netflix's dominant position with WBD's vast content library and subscriber base, the merged company would be able to raise prices, reduce service quality, and limit consumer choice — while simultaneously making it harder for other streaming services to compete.
The lawsuit identifies what it calls a "Content and Subscriber Barrier to Entry." According to the complaint, successful entry into SVOD requires both a large library of high-quality content and a large base of engaged subscribers willing to pay for it. Fendelander argues that the Netflix–WBD deal would strengthen this barrier by giving the combined company even more leverage over both content suppliers and consumers, making it nearly impossible for new competitors to emerge.
The complaint also raises concerns about employment and broader industry impacts. It alleges that the merger would give Netflix unprecedented power as a buyer of film and television content and production services, enabling the company to depress wages and working conditions for creative workers. It further contends that a Netflix–WBD combination would give the streaming giant the ability to limit which films get theatrical releases and on what terms, potentially harming movie theaters and independent producers.
Fendelander is seeking a court order to block the merger entirely, as well as a declaration that the deal violates federal antitrust law. The case is now moving through federal court in California, where Netflix is headquartered. Will the streaming industry continue to consolidate, or will regulators and courts intervene? It’s too early to tell, but stay tuned.
Related Resources:
- Unbundled Sports Streaming Service Benched by Legal Challenge from FuboTV (FindLaw's Law and Daily Life)
- How Meta Beat Antitrust Allegations and What It Means for Tech Companies (FindLaw’s Courtside)
- Authors Battle Amazon Over Audiobook Monopoly (FindLaw's Law and Daily Life)
