• The Justice Department is reviewing Paramount’s hostile bid in addition to Netflix’s proposed deal.
• In a civil subpoena, the department reportedly asked another entertainment company if Netflix engaged in any other “exclusionary conduct.”
• Netflix lawyer Steven Sunshine, however, reportedly told WSJ that the department is conducting a standard review of its proposal.

Netflix Inc. (NFLX) is reportedly under the scanner for anticompetitive tactics at the Justice Department.

The Wall Street Journal reported on Friday, citing a civil subpoena, that the Justice Department is probing whether the streaming giant was involved in anticompetitive tactics as part of its investigation into Netflix’s proposed buyout of Warner Bros Discovery’s (WBD) studios and streaming service.

“Describe any other exclusionary conduct on the part of Netflix that would reasonably appear capable of entrenching market or monopoly power,” the agency reportedly posed to another entertainment company in the subpoena.

Deal Details

Netflix inked a deal with Warner Bros for its studios and HBO Max streaming service in December. Under the deal, Netflix would pay $27.75 per share for the segments, valuing the latter at about $82.7 billion in enterprise value.

However, Paramount made a hostile bid for the entirety of Warner Bros, including its cable TV network a few days later. Warner has recommended that shareholders reject Paramount’s bid which offers $30 per share for the whole company.

Subpoena Raises Questions

The Justice Department is reviewing Paramount’s hostile bid in addition to Netflix’s proposed deal.

In its subpoena, the Justice Department has sought whether either of the two deals will hurt competition, and also probed how past mergers of studios or distributors affected competition for creative talent, WSJ said.

The department can block the deals from going through if it determines that they may substantially reduce competition. However, these merger reviews can take as long as a year, WSJ noted. The DOJ’s investigation involving Netflix is at an early stage, as per the report.

Netflix lawyer Steven Sunshine, however, reportedly told WSJ that the department is conducting a standard review of its proposal. “We have not been given any notice or seen any other sign that the DOJ is conducting a separate monopolization investigation,” Sunshine said.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around NFLX and WBD stocks stayed within the ‘bearish’ territory over the past 24 hours. Meanwhile, sentiment around PSKY rose from ‘bearish’ to ‘bullish’ territory while message volume increased from ‘normal’ to ‘high’ levels.

WBD shares have gained 168% over the past 12 months, while shares of PSKY and NFLX have dropped 10% and 19%, respectively. 

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