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Big Is Not Bad: Why Netflix–Warner Bros. Deal Fails the Antitrust Panic Test
As Congress and regulators scrutinize Netflix’s proposed acquisition of Warner Bros. Discovery (WBD), a familiar antitrust reflex has reemerged: the idea that corporate scale is inherently suspect. That instinct—rooted in a long-debunked Progressive-era view of “bigness” rather than consumer harm—now threatens to distort the review of a merger that would likely benefit consumers through lower costs, greater efficiency, and expanded choice. As economists Donald J. Boudreaux and Phil Gramm have warned, “no bad idea ever dies”—especially in antitrust. In a rare moment of bipartisan alignment, members of Congress are warning––as Senator Mike Lee (R-Utah) put it––of “the end of the Golden Age of streaming for content creators and consumers.” Moreover, after Netflix co-CEO Ted Sarandos personally met with the President to discuss the bid, President Donald Trump weighed in, worrying about the resulting “very big market share” and declaring his intent to be “involved” in the decision-making process.
Opponents of the deal have invoked an assortment of concerns calling for antitrust intervention to prevent the merger––ranging from potential job and wage cuts to a loss of Hollywood’s pluralism and big-screen cinema to the rise of monopsony power––but all ultimately hinge on Netflix–WBD’s combined scale. Nevertheless, none of these claims, however politically or culturally potent, should tip the scale against the acquisition’s approval, which would benefit consumers, even if Netflix–WBD’s competition might face new challenges. As Robert Bork articulated in The Antitrust Paradox, antitrust law should be guided exclusively by consumer welfare—through prices, output, and efficiency—and not by populist concerns about bigness, market concentration, or protecting competitors. In a world of limited resources and unlimited wants––the world we live in––consumer welfare ought to be the endgame. The approach that dominated much of American antitrust’s first eight decades—which Bork did much to overthrow—demonstrated that antitrust mission creep, untethered from rigorous economic analysis and consumer welfare, leads to reduced competition and harms consumers. Nonetheless, left-wing Neo-Brandeisians and their right-wing fellow travelers have dismissed these warnings and sought to revive this old, discredited approach.
If anything, Netflix–WBD’s vertical integration is likely, consistent with prevailing economic theory, to generate economies of scale that improve efficiency and reduce costs, not least by eliminating double marginalization. The merger would also likely expand consumer choice rather than foreclose competition by complementing Netflix’s distribution platform with WBD’s programming. Horizontal integration with WBD’s HBO Max could likewise generate consumer savings while broadening access. If structured along the lines of Disney’s acquisition of Hulu in 2019, such integration would allow for bundled pricing that lowers effective subscription costs. Disney’s streaming bundle reduced the combined monthly price of Disney+, Hulu, and ESPN+ from nearly $18 to $13. There is no reason to think a Netflix–HBO Max bundle would operate differently. Nor would the deal create an uncompetitive or overly consolidated industry. The burden of proof must be borne by antitrust enforcers. Even under a narrow market definition, the subscription-video-streaming market includes at least six major rivals. More realistically, platforms such as YouTube also vie for consumers’ television screen time, leaving Netflix–WBD with roughly 14 percent of total TV viewing. Similarly, critics worried about Netflix holding exclusive intellectual property rights to WBD’s content can take comfort in the fact that nine other major movie studios produce original content—including the industry leader, Universal Pictures—for which competing streaming services actively bid. Competition is set to remain fierce.
By fundamentally misunderstanding market dynamism—the way innovation disciplines competition—regulators often fight the wrong battles. Netflix disrupted a more-than-century-old industry when it introduced consumers to on-demand streaming and the binge-watching model. Its data-driven algorithms reduced the risk associated with original content ownership, enabling it to bypass movie theaters.
Moreover, consumers voted with their dollars to make Netflix the world’s streaming powerhouse, not the other way around. And Netflix delivered by saving them the cost and time of going to theaters. Regulators should not override consumer sovereignty, especially not in the name of protecting it.
While a lengthy regulatory review is inevitable, consumer welfare should remain at the forefront of the Trump administration’s calculus.
How Federal Red Tape Is Driving Up College Costs
Government involvement in American higher education has been an abject and costly failure. Out-of-control taxpayer-funded subsidies have resulted in higher—not lower—tuition bills for students and their families. In addition to throwing money at the problem, bureaucrats are foolishly trying to regulate their way to a more effective and efficient higher education system. The federal government is once again trying to pick winners and losers among education programs it deems worthy, even though Congress has already come up with a more even-handed approach to measure college performance. The Trump administration should flunk unnecessary rules and grade all college programs using the same metrics. Former President Biden ignored the interests of taxpayers while shoveling out “free” money as fast as he could. That cavalier extravagance has come to a screeching halt under the leadership of Department of Education (DoE) Secretary Linda McMahon. As she told the House Education Committee this summer, “[I]f the degrees that these students get, or if they drop out of school, or if performance isn’t as expected, and these loans remain unpaid, they become the burden of all taxpayers. It's not that loans are forgiven or they go away; they're just shouldered by others.” Of course, the “others” that Secretary McMahon refers to are the American taxpayers.
Unfortunately, problems still linger from the Biden era. Former President Biden’s 2023 “Financial Value Transparency and Gainful Employment” rule (which is still on the books) applies stringent restrictions to “nearly all educational programs at for-profit institutions of higher education, as well as non-degree programs at public and private nonprofit institutions such as community colleges.” To participate in the federal loan process, covered programs need to prove that graduates increase their earnings (compared to high school graduates) and aren’t straddled with high debt as a percentage of their income. Bizarrely, the Biden administration chose not to apply the same accountability metrics to non-profit institutions offering four-year programs, even though these programs are at the root of higher education’s many problems. According to a 2024 analysis by The Burning Glass Institute, 52% of graduates with only a bachelor’s degree end up underemployed a year following their graduation, employed in jobs they are overqualified for. Suzanne Kahn, vice president of the think tank at the Roosevelt Institute, notes, “Since 2023, [about] 85% of the rise of the unemployment rate is concentrated in new market entrants. And the rise in unemployment for college graduates has been [about] triple that of everybody else, which is just, I think, sort of unprecedented.” Despite these broader problems impacting all programs, including traditional bachelor’s degrees, President Biden’s DoE refused to say why it wasn’t applying its rule to the entire higher education sector. The final rule noted that “commenters argued that 4-year degree programs (administered at private nonprofit and public institutions) saddle students with more debt than shorter programs,” and unreassuringly responded that “the rule includes transparency provisions for non-GE programs, including 4-year degree programs.” Requiring “transparency” is simply not the same as subjecting college programs to stringent pass-fail metrics.
Fortunately, the One Big Beautiful Bill (OBBB) seemingly leveled this uneven playing field. As American Enterprise Institute senior fellow Preston Cooper explains, “OBBB institutes a ‘do no harm’ test for higher education. The law revokes a degree program’s eligibility for federal student loans if the earnings of its graduates are too low.” The government determines the median annual earnings of graduates four years following program completion and compares these earnings to a program-chosen benchmark corresponding to what students would have earned in the absence of a degree. While there are some exceptions to the OBBB’s “do no harm” standard, the rules are far more broad-based than the Biden regulations and apply to non-profit four-year degree programs. With this standard put into place by Congress, one might think that the DoE rule is now obsolete and should be gone by now. Unfortunately, it has overstayed its welcome and creates a duplicative and deeply unfair double-enforcement regime. That’s a significant problem for taxpayers and students.
The Trump-McMahon DoE can correct course with the impending launch of the AHEAD negotiated rulemaking committee, which finally has a chance to wrestle power from the vestiges of former President Biden’s unaccountable DoE. That includes finally ending the obsolete “Gainful Employment” rule. There’s simply no reason why the federal government should favor some college programs over others and straddle the sector in high duplicative costs that are passed along to students. It’s time for a new approach to higher education that kicks needless spending and rules off campus.
Blogs:
Monday: The Unintended Consequences of Minimum Wage Hikes
Tuesday: Big Is Not Bad: Why Netflix–Warner Bros. Deal Fails the Antitrust Panic Test
Thursday: Minnesota’s “Industrial-Scale” Fraud is a Wake-Up Call for Welfare Reform
Have a great weekend!
David Williams
President
Taxpayers Protection Alliance
1101 14th Street, NW
Suite 500
Washington, D.C.
Office: (202) 930-1716
Mobile: (202) 258-6527
www.protectingtaxpayers.org
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