Netflix co-chief executive Ted Sarandos faced tough questioning over whether the streamer is “overwhelmingly woke” or killing competition on Tuesday afternoon during a congressional hearing focused on its pending acquisition of the film and streaming assets of Warner Bros Discovery.
The hearing was conducted by the Senate subcommittee on antitrust, competition policy, and consumer rights. Bruce Campbell, chief revenue and strategy officer for Warner Bros Discovery, also testified in the packed Senate hearing room.
Both Sarandos and Campbell addressed concerns about how the merger would affect entertainment industry jobs, whether it would raise consumer prices for streaming services, whether it would result in less content for users, and whether it would hurt the movie theater business.
“We’re going to operate the WarnerBros studio largely as it is today,” Sarandos said in response to a question from Democratic senator Adam Schiff about whether the merger would result in layoffs.
Josh Hawley, a Republican Senator, specifically questioned Sarandos about the content of Netlix programming, using data that Sarandos said was “inaccurate”. Hawley said he and his wife have to review the Netflix content their children want to watch because “I don’t have confidence in what’s on your platform.”
“Why is it that so much of Netflix content for children promotes a transgender ideology?” Hawley asked. “An enormous amount of your children’s programming has this ideology in it.”
Sarandos said that “Netflix programming has no agenda of any kind,” adding: “We feature a wide variety of stories and programs to meet a wide variety of tastes.”
“My concern is that you don’t share my values or that of many American parents,” Hawley said. “I think we ought to be concerned about what content you’re promoting.”
Eric Schmitt, a Republican senator from Missouri, pressed Sarandos on donations made by Netflix employees to Democrats and accused him and his company of promoting “DEI and wokeness”. “The overwhelming majority of your stuff is overwhelmingly woke,” he added.
“We have no political agenda,” Sarandos responded. “We have a great deal of programming on Netflix, left, right and center.”
When asked by a Democratic senator about concerns that past media mergers have resulted in job losses, Sarandos acknowledged that “most media mergers have faired poorly” – but said “this media merger will be different than any of the others because we actually need these people.”
The chair of the subcommittee, Republican senator Mike Lee, began the hearing by saying that the merger raises competition concerns because Netflix would no longer be competing with a streaming service it would acquire, HBO Max.
“The merged firm would have both the incentive and the ability to put rivals at a disadvantage,” Lee said in his opening remarks, saying the deal could “further entrench Netflix’s dominance”. “All told, one might say that Netflix seeks to become the online platform to rule them all,” he added.
Republican senator Chuck Grassley said “this proposed merger could affect prices and choices,” saying his constituents “deserve real competition that keeps prices in check” for subscriptions.
In his opening remarks, Sarandos talked about the value of the merger and the need to compete in an extremely competitive marketplace for content.
“With WBD, we’re going to create more economic growth and more value for consumers,” Sarandos said. “We will give consumers more content for less … We’re buying a company that has assets we do not, and we will keep investing in Warner Bros.”
Originally announced in early December, Netflix upgraded its purchase price in mid-January to make the transaction – valued at $82.7bn – all-cash.
Paramount Skydance has made several unsuccessful offers for the entirety of Warner Bros Discovery, including its television assets.
Cory Booker, top Democrat on the subcommittee, said he invited Paramount Skydance chief executive David Ellison to appear at the hearing but he declined. “The absence of having Paramount Skydance here is frustrating,” he said, although he thanked Ellison for meeting with him and other senators to discuss his company’s bid.
“The acquisition of WBD by either Netflix or Paramount or another company would result in consolidation of a sector of our economy that has already seen significant consolidation,” Booker said. “With either merger, another company will gain more control over what we see, what we hear and what we consume.” (Booker admitted to being a Netflix power-watcher, saying he “watches Netflix with hours I don’t want to confess in an open hearing”.)
Anti-monopoly groups and veterans of the anti-trust space have said that Netflix’s acquisition of WBD presents competition concerns that will surely be looked at closely by both domestic and international regulators.
While the anti-trust division of the justice department has the most significant role to play in approving the deal, along with the Federal Trade Commission, state attorneys general could also file lawsuits.
Booker said on Tuesday that he hopes that antitrust regulators will “review this merger fairly” and without political bias, citing concerns that Donald Trump could seek to interfere inappropriately to press for changes at media companies he dislikes, including the WBD television network CNN.
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