Netflix Shares Drop After Warner Bros. Deal Raises Regulatory and Competitive Concerns

Netflix shares declined sharply to $427.80 per share after the company disclosed expanded discussions with Warner Bros. Discovery on a potential deal to acquire its streaming portfolio. The move, which could value the streaming assets at approximately $48 billion, has triggered concerns among regulators and analysts about market dominance in the global digital entertainment sector. The proposed transaction, if completed, would consolidate over 200 million global subscribers under one platform, raising antitrust considerations in the U.S., EU, and other major markets. Multiple regulatory bodies have signaled increased vigilance, with the Federal Trade Commission issuing a preliminary inquiry into potential anti-competitive effects on content pricing and licensing terms. Analysts point to a 20% increase in Netflix's subscriber growth forecast for 2026, now contingent on regulatory approval. However, the current market reaction suggests skepticism: the stock's market capitalization dropped by $28 billion in a single session, erasing gains from recent content launches. Meanwhile, Disney and Amazon have publicly expressed concerns about the deal’s impact on content availability and competitive balance. Investors are particularly wary of the implications for original content investment, with Netflix's R&D budget for 2025 projected at $14.7 billion. A combined entity could reduce spending flexibility, affecting production timelines and global content diversification.