In addition to benefiting consumers at home, the proposed Netflix – Warner Bros. merger promises to enhance U.S. soft power abroad. If consummated, the merger will ensure that an American company remains the world’s top streaming service with an added capacity to distribute even more iconic American films and franchises to foreign audiences. As President Trump continues to promote America’s need to win the race for global technological leadership, this merger will cement America’s soft power leadership in entertainment -- and to spread U.S. culture and values, including our belief in freedom and democracy, across the planet.
According to the Global Soft Power Index, a nation’s power is measured, in part, by global perceptions of its culture, heritage, and media. For instance, South Korea’s international profile has improved due to the success of its recent films and TV shows. The U.S. currently holds the top spot, but, as in many things, China has moved into second place and has narrowed the gap.
The merger will enhance the U.S. soft power by broadening the reach of our cultural touchstones. Netflix reaches millions of homes throughout Europe, the Middle East, Africa, Latin America, and Asia. Warner Bros., which released the first overtly anti-Nazi film prior to World War II, holds the rights to many properties that exemplify truth, justice, and the American way, from Superman to Sergeant York, as well as cultural phenoms about the value of freedom, including "Harry Potter," "Game of Thrones," and "Lord of the Rings." The merger will improve the accessibility of these classics, and expand Netflix’s attractiveness to audiences across the globe and support the production of local content around the world, a practice that deepens ties between U.S. and foreign entertainers.
At the same time, Chinese companies, including Tencent Video and iQIYI, are gaining significant market share, particularly in Southeast Asia. China’s entertainment strategy often aligns with its geopolitical goals, shaping narratives and censoring content to suit its interests – famously, China would not allow "Top Gun: Maverick" to play domestically because Tom Cruise’s jacket displayed a Taiwanese flag. To win the cultural competition with China, the U.S. needs companies with the scale, technology, and world-class content to spread American values, particularly in developing areas such as Africa, Latin America, and the Middle East, which have long been the subject of Chinese designs. We should want the world to watch Band of Brothers, not some sanitized story about Mao and the Cultural Revolution.
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The merger also promises to benefit American consumers and workers here at home. By every measure, the merger will promote competition: output will rise, prices will fall, and employment will increase. By combining resources, the merged company will offer more content on fewer, easier-to-navigate platforms. As part of the merger, for example, Netflix has committed to preserving Warner Bros. as a distinct creative engine and to growing domestic production. In recent years, Netflix has spent more than $125 billion in U.S. production and it now plans additional investments, including a $900 million build-out in New Mexico and a $1 billion studio facility in New Jersey. Netflix’s CEO, Ted Sarandos, has affirmed that “We’re not cutting jobs— we’re making jobs.”
In addition, as the nation continues to grapple with affordability issues, the merger should reduce prices for millions of consumers. In particular, consumers will no longer have to subscribe separately to Netflix and HBO Max, the streaming service of Warner Bros. More than 75 percent of HBO Max subscribers also subscribe to Netflix; the merger will streamline access and reduce expenses for millions of these households. Over the longer term, the new entity’s scale will enable more bundled deals and cost savings. As part of the merger announcement, Netflix has also committed to licensing Warner Bros. shows to other platforms.
Both the courts and, during the Trump Administration, the antitrust agencies have shown a willingness to accept reasonable behavioral remedies to address any antitrust concerns; in the mergers of Microsoft-Activision Blizzard, Amgen-Horizon Therapeutics, and Omnicom's acquisition of Interpublic, the antitrust agencies worked closely with the merging companies to resolve any concerns. Particularly where, as here, a merger offers the nation significant benefits abroad, the antitrust agencies should work with the merging parties to find reasonable solutions.
For these reasons, the Netflix-Warner Bros. merger represents a unique opportunity to bolster America’s cultural influence abroad and its economic vitality at home. By combining the strengths of two industry leaders, the merger will enhance the global reach of U.S. values and deliver tangible benefits to American consumers and workers, all key priorities of the Trump Administration. As the U.S. faces increasing competition from China, this merger will ensure that American entertainment remains the global standard.
Asheesh Agarwal is an alumnus of the Department of Justice, Federal Trade Commission (FTC) and first Trump Administration.
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