Incipient Monopolization in Digital Streaming: Judicial Oversight of Contemporary Entertainment Consolidation

On February 27, 2026, Paramount Global confirmed a $110 billion all-cash offer to acquire Warner Bros. Discovery, creating one of the largest media mergers in U.S. history. The offer followed a bidding war with Netflix; however, Warner Bros. ultimately signed the initial offer from Paramount. Netflix later ceased its bidding after the United States Department of Justice (DOJ) began an antitrust investigation into the proposed Netflix-Warner Bros. merger. Paramount’s offer and acquisition were not met with the same scrutiny. Paramount’s waiting period, mandated by the Hart-Scott-Rodino Antitrust Improvements Act (HSR), expired on February 19, 2026. The legal barriers that Netflix and Paramount each faced were markedly different. Warner Bros. Discovery functions as both a major content producer and distributor, owning cable networks and streaming platform HBO Max, meaning its acquisition by another major content producer and distributor,  such as Paramount or Netflix is significant for antitrust analysis. 

The expiration of the HSR waiting period indicated that the DOJ chose not to block the deal in a preliminary review period. However, this does not mean that the merger complies entirely with Section 7 of the Clayton Act, which prohibits an acquisition that may “substantially [...] lessen competition, or tend to create a monopoly.” Federal and state governments and courts still have the authority to oppose the deal under the Clayton Act before or after the proposed acquisition. California Attorney General Rob Bonta has already indicated a need to investigate the transaction. 

In combining two of Hollywood’s largest production studios, both of which have streaming platforms and large content libraries, the merger between Warner Bros. and Paramount still raises clear horizontal concentration and vertical integration concerns that the Supreme Court of the United States (SCOTUS) has legally condemned. The DOJ’s passive action in response to this acquisition is inconsistent with the Clayton Act’s preventative doctrine. The judiciary should instead apply the presumptions and legal frameworks applied in Brown Shoe Co. v. United States (1962), United States v. Philadelphia National Bank (1962), and United States v. Paramount Pictures, Inc. (1948), to block this merger or ensure that Paramount conducts divestitures as a condition of the merger’s approval.

Section 7 of the Clayton Act (1914) was instituted as a preventative measure, ensuring that courts have the opportunity to act against a monopolistic merger before its outcomes are fully realized. SCOTUS defined this mandate in its ruling of Brown Shoe Co. v. United States, where the defendants, a shoe manufacturing company, sought to acquire a chain of retailers. This acquisition was struck down by the Supreme Court, who cited the judiciary’s responsibility to “arrest antimonopoly trends in their incipiency”. Furthermore, SCOTUS interpreted the use of the word “may” in the statute as an operative word chosen by the legislature to ensure that courts could intervene before a merger became irreversibly harmful to the American consumer. The Court held that the word ‘may’ connoted a reasonable likelihood of anticompetitive effects. Thus, the government does not need to explicitly prove harm has occurred, but prove that the merger poses the risk of reducing competition. Brown Shoe Co. established the responsibility of courts in assessing the horizontal (merging of firms that compete in the same market, thereby reducing the number of independent competitors) and vertical effects (acquiring a company in a different stage of the supply chain) of a merger.

The use of “incipiency” has direct applications to the merger in question. The combined Paramount-Warner Bros. Discovery would combine two of Hollywood’s largest media conglomerates. Consequently, the merging of the studios’ streaming services, HBO Max and Paramount Plus, would consolidate the two companies' massive media franchises (DC Comics, Harry Potter, Star Trek, Mission: Impossible, etc.) and television networks (CBS, CNN, TNT, etc.). Thus, precedent established in Brown Shoe Co. ensures that courts do not and should not wait for the company’s price increases and foreclosures to occur before acting. A merger between the two companies will likely result in higher subscription prices for consumers and reduced licensing of content to rival streaming platforms. The judiciary must determine and preemptively act based on whether the conditions of this merger will result in such harmful outcomes. In both the film distribution and subscription streaming markets, these conditions are present for both companies. 

Challenging a merger and acquisition on the grounds of Section 7 begins with defining the relevant market. During this process, merging companies will attempt to object to antitrust scrutiny. In Brown Shoe Co., SCOTUS established that courts must identify a firm’s relevant product and markets by analyzing a company’s brand recognition, product characteristics, and consumer behavior. This was enforced in United States v. Philadelphia National Bank, where defendants claimed that their relevant market was larger than commercial banking in Philadelphia, thus positioning themselves in a broader market to dilute antitrust claims. The court rejected such claims, establishing foundational language in Section 7 where a merger between companies that produces “an undue percentage share” of a properly defined market and a “significant increase in the concentration of firms” within it is unlawful. This unlawfulness cannot be objected to by diluting a firm’s market power through the expansion of its market. 

Any objections to the merger will likely result in Paramount and Warner Bros. arguing for the broadest market definition of “entertainment,” a category that would encompass social media, video games, and theatrical cinema, to dilute the appearance of the company’s combined market presence. Thus, courts must apply the same skepticism and ruling as they did in Philadelphia National Bank to such attempts. Film distribution, as a market, has various formalized submarkets, making it distinct from the casual video consumption of a market like social media. WBD holds approximately 21 percent of the domestic film distribution market while Paramount holds 6 percent, meaning that a merger would result in a combined 27 percent, falling below the 30 percent threshold that the DOJ and Federal Trade Commission outlined as a structural marker for unlawful merging. However, the guidelines also state that any merger producing a Herfindahl-Hirschman Index (HHI), found by summing the squares of each firm’s market share, of above 1,800 with a delta above 100 points is anticompetitive. The current HHI, found by summing the squared market shares of current film distributors (Disney, Warner Bros., Universal, Paramount, Sony, etc.), is approximately 1,771. After the merger, the HHI would be 2,123, meaning an increase of 252 points. Under the DOJ’s guidelines, such increases of concentration above 100 points and an HHI of 1,800 are presumed to enhance market power and should thus raise concerns of anticompetition. This merger exceeds both of these thresholds. 

The company’s market presence in the subscription video-on-demand (SVOD) market presents similar concerns. SVOD services are distinct markets, separate from advertisement-supported platforms and traditional television, under the market definitions as found in Brown Shoe Co. SVOD services are a distinct submarket because of their subscription-based models and on-demand access to content libraries, having exclusive licensing to specific programming. The current pre-merger HHI for SVOD is above the 1,800 threshold for markets with high concentration, with a merger between Paramount Plus and HBO Max effectively eliminating a streaming service as a competitor. As defined in Philadelphia National Bank, increasing concentration in a poorly defined and narrow market should be evidence enough to trigger Section 7 of the Clayton Act before the merger results in price increases and output restrictions. 

In addition to the concerns with market concentration, horizontal concerns in the merger’s vertical structure are similar to the anticompetitive integration outlawed in United States v. Paramount Pictures, Inc. The Supreme Court held that Paramount Pictures was in violation of antitrust law by producing films and owning theater chains, effectively controlling and withholding the films that the consumer had access to. Controlling both the content production and exhibition, Paramount Pictures limited the capability of its competitors and the distribution channels needed for other film studios. This resulted in dominance over the entire industry. SCOTUS implemented a structural remedy in which Paramount Pictures was forced to divest its theater holdings, claiming that structural separation was the only solution that would restore competitive market conditions. 

The Paramount-Warner Bros. merger has a comparable structure in the streaming era. The merged entity would control two major content producers, Paramount Pictures and Warner Bros. Studios, the two major SVOD platforms Paramount Plus and HBO Max, multiple television networks, and many commercially valuable franchises in their combined content library. Paramount-Warner Bros. would have the economic incentive and capability to restrict competing platforms’ access to content that appeals to the consumer, raising their costs and limiting the intellectual property claims needed for competitors. 

If a federal or state attorney successfully challenges this merger under Section 7 of the Clayton Act, then the merger will only continue if structural divestitures or behavioral remedies ensue. The question arises of which should be implemented in this case. Structural solutions, as seen in the divestiture of Paramount Pictures, are direct solutions, as such changes will restore the previous competitive conditions without requiring constant review and regulation of the market and firm by the industry. Behavioral solutions require supervision that courts do not have the capacity to consistently ensure, especially in the digital media market, where content licensing and consumer strategies are rapidly changing and evolving. Behavioral remedies cannot successfully and consistently meet their intended goals, as the merged firm will likely attempt to circumvent them.

The structural remedy used in Paramount Pictures, as well as the Supreme Court’s responsibility of arresting anticompetitive practices in their “incipiency,” supports the implementation of a structural remedy in this context. The court must require a divestiture of Paramount Plus or HBO Max as streaming services or the sale of specific assets in the content library of Paramount Plus and Warner Bros. to ensure that competitors in the SVOD retain access to such licenses. These remedies would ensure the maintenance of competitive conditions that the current merger eliminates without mandating constant and impractical judicial supervision.

The Paramount-Warner Bros. merger and the DOJ’s approval of the merger reflect larger changes in contemporary antitrust laws. The media market has shifted from physical entertainment to digital content distributed on streaming platforms, making the “incipiency” mandate of Section 7 urgent. The proposed merger between Netflix and Warner Bros. yielded intense DOJ and antitrust criticism, yet a merger by Paramount Pictures did not elicit such responses. The inconsistency in the reactions to Netflix’s proposal and Paramount’s proposal suggests that Hart-Scott-Rodino clearance is treated as meaningful evidence in antitrust review rather than a preliminary procedural assessment. State judiciaries, state attorneys, consumer plaintiffs, and federal courts still maintain the authority and means to reach a different conclusion.

The structural case against this merger is evident when viewing the actual standards of Section 7 of the Clayton Act. In film distribution, the combined Paramount-Warner Bros would maintain a market share that, as established in Philadelphia National Bank and as outlined in the DOJ’s 2023 Merger Guidelines, is illegal. In the SVOD market, the proposed merger would lead to the loss of a major competitor in an already concentrated market, meeting the “incipiency” language of Brown Shoe. Integrating these two studios and their content libraries with their streaming services is analogous to the exact structure that the Supreme Court condemned in Paramount Pictures. The role of the courts in this emerging legal moment of market and media consolidation is crucial, ensuring that media market power does not become increasingly concentrated and controlled by an oligopoly that maintains power over the production and distribution of content that viewers consume. 

Edited by Jacqueline Hutchins.

This piece was reviewed and finalized by Gabi Fabozzi, Qizhen (Kiara) Ba, and Jasmine Lianalyn Rocha.