Paramount accuses Netflix of "scorched-earth campaign" against WBD merger - Ars Technica

Overview

Paramount accuses Netflix of “scorched-earth campaign” against WBD merger

Paramount Skydance is accusing Netflix of maintaining a campaign against its proposed acquisition of Warner Bros. Discovery (WBD).

Details

In a June 5 letter (PDF) addressed to Jared A. Hughes, acting section chief of the Media, Entertainment, and Communications Section of the US Department of Justice’s (DOJ’s) Antitrust Division, and A. Maya Kahn, a trial attorney for the Antitrust Division, and first reported on by Politico today, Paramount chief legal officer Makan Delrahim accused Netflix of trying to influence stakeholders about the merger. The letter reads:

Indeed, Netflix’s panic-level response and scorched-earth campaign to try and poison regulators and other stakeholders against the Transaction shows just how seriously Netflix takes Paramount as a scaled competitor.

Indeed, Netflix’s panic-level response and scorched-earth campaign to try and poison regulators and other stakeholders against the Transaction shows just how seriously Netflix takes Paramount as a scaled competitor.

The letter from Delrahim, a former assistant attorney general for the Antitrust Division, is a response to a letter that The International Brotherhood of Teamsters sent to the DOJ in March. The teamsters’ letter argued that Paramount and WBD’s merger would threaten film and TV workers. The union, which has 1.3 million members, asked the DOJ to block the merger “unless substantial and enforceable safeguards are put in place to increase domestic production and protect jobs,” per an announcement from the group.

Paramount’s top lawyer, however, this month argued that the merger would “not reduce work opportunities for the Teamsters or other organized labor” and would lead Paramount to create more content, including movies and programming for its streaming services and broadcast TV channels. This will push competitors to follow suit, Delrahim claimed.

Delrahim said the merger would bring more opportunities for writers and directors, as well as actors, drivers, location scouts, casting directors, caterers, mechanics, and animal handlers.

Paramount’s letter pointed to an increase in content production after Paramount merged with Skydance in 2025. Since then, Paramount has either purchased or renewed 20 shows and “will nearly double its theatrical output this year as compared to 2025,” Delrahim wrote.

“More films and series in production means more call sheets, more location days, more transportation, casting, and catering work,” Delrahim wrote.

Notably, in a January SEC filing, Paramount said that it expects Paramount-WBD to spend less money on content as a combined company. Content spend would drop by less than 10 percent, and none of the spending reductions would come from “film/TV studios,” the filing said.

Paramount CEO and chairman David Ellison has said that post-merger, Paramount would release at least 30 feature films annually, with each film being in theaters for at least 45 days. Ellison has been making this promise publicly since at least February.

Delrahim’s letter paints a rosy picture of jobs and content spend post-merger; however, Paramount has previously said that a merger with WBD would result in job losses as the merged company looks to save over $6 billion. Cost savings would primarily come from “duplicative operations across all aspects of the business — specifically back office, finance, corporate, legal, technology, infrastructure and real estate,” Paramount said in a January SEC filing.

Notably, a merged Paramount and WBD would carry $79 billion in debt.

In his note to the DOJ, Delrahim said that the merged company would not reduce headcount in production, “studio operations staff, or the skilled trade labor that the Teamsters and other unions represent.”

Delrahim blames merger concerns on fear-mongering, antisemitism

Although Netflix backed out of its deal to buy Paramount in February, Delrahim believes Netflix is trying to turn people against Paramount buying WBD. His letter reads:

Netflix has tried to persuade the Teamsters and other stakeholders that Disney’s [2019] acquisition of [21st Century] Fox had a negative impact on content production and labor opportunities. Frankly, Netflix’s “sky is falling” narrative departs significantly from the ground-truth reality of what actually happened.

Netflix has tried to persuade the Teamsters and other stakeholders that Disney’s [2019] acquisition of [21st Century] Fox had a negative impact on content production and labor opportunities. Frankly, Netflix’s “sky is falling” narrative departs significantly from the ground-truth reality of what actually happened.

In its March letter, The International Brotherhood of Teamsters pointed to Disney’s acquisition of 21st Century Fox as indicative of what would happen if Paramount buys WBD. Disney’s Fox studios merger resulted in “eliminated production units, significant job losses, and canceled projects.”

Delrahim’s letter claims that this argument overlooks Disney’s modifications to its feature film release strategy before buying Fox, the impact of the COVID-19 pandemic on Disney’s theatrical release strategy, and an increase in wide-release theatrical films in the US from 2019 to 2025.

Interestingly, Delrahim also claimed that Disney increased content spend from

Netflix responded to Delrahim’s letter by calling Paramount’s claims “absurd.”

“We walked away from this deal months ago and remain focused on our own business, not theirs. Ultimately, it’s up to the regulators to approve this deal and determine if it is in the best interest of the industry and all concerned,” a Netflix spokesperson said, per Politico.

The Teamsters haven’t commented, and Paramount has declined to comment on the letter.

Delrahim, in an interview with the Los Angeles Times earlier this month, also accused people of campaigning against the Paramount-WBD merger and blamed antisemitism without further explanation.

“Let’s be honest. There’s a lot of fear-mongering, particularly from people in Washington, D. C. They are running a political campaign. Some of these people are trying to inflict harm on this transaction really because of their own antisemitic views. Regulators and law enforcement officials will see right through that,” he said.

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Key Takeaways

• Paramount accuses Netflix of “scorched-earth campaign” against WBD merger

• Paramount Skydance is accusing Netflix of maintaining a campaign against its proposed acquisition of Warner Bros

• In a June 5 letter (PDF) addressed to Jared A

• Indeed, Netflix’s panic-level response and scorched-earth campaign to try and poison regulators and other stakeholders against the Transaction shows just how seriously Netflix takes Paramount as a scaled competitor

• Indeed, Netflix’s panic-level response and scorched-earth campaign to try and poison regulators and other stakeholders against the Transaction shows just how seriously Netflix takes Paramount as a scaled competitor