Update: Netflix Steps Back from Warner Bros. Discovery Bid
New disclosures reduce the likelihood of the more inflationary streaming merger scenario analyzed in our recent simulations.
We’re writing to update our earlier Substack post, If Streaming Platforms Merge, Will Subscription Prices Increase?, which examined the potential subscription price effects of two merger scenarios involving Warner Bros. Discovery (WBD): a Netflix–WBD combination and a Paramount–WBD combination.
Since publication, Warner Bros. Discovery disclosed in a February 2026 filing that its board determined a revised proposal from Paramount Skydance constitutes a “Company Superior Proposal.” In response to that determination, Netflix indicated that it does not intend to increase its prior offer for WBD’s streaming and studio assets, effectively stepping back from the active bidding process described in Warner Bros. Discovery’s investor relations announcement.
Despite the absence of a finalized transaction, this development significantly impacts the competitive scenarios we analyzed earlier. In particular, our merger simulations showed that if Netflix and WBD merged, it would likely lead to the biggest increase in subscription prices after the merger—about 8–10% in our basic model—because of their combined market share and how similar Netflix and Max are based on the pricing data we used.
By contrast, a Paramount–WBD merger generated smaller (though still meaningful) simulated price effects of roughly 4–5% in the same baseline specification. Netflix stepping back, therefore, reduces—though does not eliminate—the likelihood of the more inflationary consolidation scenario we previously analyzed.
As shown below, the now less likely Netflix–WBD merger generated substantially larger predicted price and concentration effects.
By contrast, a Paramount–WBD merger generated smaller (though still meaningful) simulated price effects of roughly 4–5% in the same baseline specification. Netflix stepping back therefore reduces — though does not eliminate — the likelihood of the more inflationary consolidation scenario we previously analyzed.
Failed and Restructured Digital Mergers Under the 2023 Guidelines
The apparent collapse of the Netflix–WBD scenario is consistent with a broader pattern of large horizontal mergers in differentiated digital markets being abandoned or restructured following regulatory scrutiny.
For example, Adobe abandoned its proposed acquisition of Figma after concluding there was no clear path to resolving antitrust investigations in multiple jurisdictions (see the Global Competition Review coverage). Similarly, Microsoft’s acquisition of Activision Blizzard was initially blocked by the UK Competition and Markets Authority due to concerns about foreclosure in cloud gaming markets, but it ultimately proceeded only after the transaction was materially restructured to divest certain cloud streaming rights, as discussed in this competition law analysis.
These developments align closely with the analytical framework articulated in the 2023 U.S. Merger Guidelines, which emphasize that competitive harm in digital platform markets may arise not only through static market concentration but also through diminished future rivalry among differentiated products, weakened constraints from potential competitors, or foreclosure across adjacent ecosystems. In these situations, even if mergers don't immediately get rid of a leading company, they can still lower the motivation to compete on price, quality, or innovation by making similar products less competitive or by allowing companies to combine their services after the merger.
Streaming services exhibit many of these characteristics: differentiated product offerings, multi-sided platform effects, and competition that depends on future content investment and subscriber acquisition rather than solely on current market share. As a result, consolidation among SVOD providers may attract scrutiny not only because of present concentration levels but also because of potential impacts on dynamic competition in an evolving media ecosystem.
From a competition-policy viewpoint, the focus is now on whether any future deal with WBD would significantly raise concentration in the subscription video-on-demand (SVOD) market and reduce price competition among major streaming services.
As before, we emphasize that these simulations are illustrative and rely on publicly available information on subscription prices and market shares. We will continue to monitor developments and update our analysis should a definitive agreement involving WBD emerge.
👉 Read our original merger simulation analysis here:
https://blog.econworks.com/p/if-streaming-platforms-merge-will?r=562wri