Business
Commentary: Serious backlash to a Netflix/Warner Bros deal may come from European regulators
If you’re looking for where the most crucial governmental backlash to a merger deal involving Warner Bros. Discovery, you might want to turn your attention east — to Europe, where regulators are girding to take an early look at any such deal.
Both of the leading bidders — Netflix, which has the blessing of the WBD board, and Paramount, which launched a hostile takeover bid — could face obstacles from the European Union. EU officials have spoken only vaguely about their role in judging whatever deal emerges, since the outcome of the tussle remains in doubt.
The European Commission “could enter to assess” the outcome in the future, Teresa Ribera, the EU’s top antitrust official, said last week at a conference in Brussels, but she didn’t go beyond that. Pressure is mounting within Europe for close scrutiny of any deal.
A deal with Netflix as the buyer likely will never close, due to antitrust and regulatory challenges in the United States and in most jurisdictions abroad.
— Paramount makes its appeal to the Warner board
As early as May, UNIC, the trade organization of European cinemas, expressed opposition to a Netflix deal. The exhibitors’ concern is Netflix’s disdain for theatrical distribution of its content compared to streaming.
“Netflix has time and again made it clear that it doesn’t believe in cinemas and their business model,” UNIC stated. “Netflix has released only a handful of titles in cinemas, usually to chase awards, and only for a very short period, denying cinema operators a fair window of exclusivity.”
Neither WBD nor Netflix has commented on the prospect of EU oversight of their deal. Paramount, however, has made it a key point in its appeals to the WBD board and shareholders.
In both overtures, Paramount made much of the size and potential anti-competitive nature of Netflix’s acquisition of WBD. In a Dec. 1 letter sent via WBD’s lawyers, Paramount asserted that the Netflix deal “likely will never close due to antitrust and regulatory challenges in the United States and in most jurisdictions abroad. … Regulators around the world will rightfully scrutinize the loss of competition to the dominant Netflix streamer.”
Netflix’s dominance of the streaming market is even greater in Europe than in the U.S., Paramount said, citing a Standard & Poor’s estimate that Netflix holds a 51% share of European streaming revenue. That figure swamps the second-place service, Disney, with only a 10% share. Paramount made essentially the same points in its Dec. 10 letter to WBD shareholders, launching its hostile takeover attempt at Warner.
European business regulators have been rather more determined in scrutinizing big merger deals — and about the behavior of major corporate “platforms” such as Google and X.com — than U.S. agencies, especially under Republican administrations. One reason may be the role of federal judges in overseeing antitrust enforcement by the Federal Trade Commission.
“Despite the European Commission (EC) successfully doling out fines numbering in the billions of euros for giants like Apple and Google for distorting competition, the FTC has struggled significantly in court, losing virtually all its merger challenges in 2023,” a survey from Columbia Law School observed last year.
The survey pointed to differing legal standards motivating antitrust oversight: “American courts have placed undue weight on preventing consumer harm rather than safeguarding competition; by contrast, the EU has remained centered on establishing clear standards for competitive fairness.”
In September, for example, the European Commission fined Google nearly $3.5 billion for favoring its own online advertising display services over competing providers. (Google has said it will appeal.) The action was the fourth multi-billion-dollar fine imposed on Google by the EC since 2017; Google won one appeal and lost another; an appeal of the third is pending.
As an ostensibly independent administrative entity, the EC at least theoretically comes under less political pressure from the 27 individual members of the European Union than the FTC and Department of Justice face from U.S. political leaders.
President Trump has made no secret of his doubts about the Netflix-WBD deal. As I reported last week, Trump has said that Netflix’s deal “could be a problem,” citing the companies’ combined share of the streaming market. Trump said he “would be involved” in his administration’s decision whether to approve any deal.
That feels like a Trumpian thumb on the scale favoring Paramount. The Ellison family is personally and politically aligned with Trump, and among those contributing financing to the bid is the sovereign wealth fund of Saudi Arabia, a country that has recently received lavish praise from Trump. Another backer is Affinity Partners, a private equity fund led by Jared Kushner, Trump’s son-in-law.
The most important question about European oversight of the quest for WBD is what the regulators might do about it. The European Commission tends to be reluctant to block deals outright. The last time the EC blocked a deal was in 2023, when it prohibited a merger between the online travel agencies Booking.com and eTraveli. The EC ruling is under appeal.
At least two proposed mega-mergers were withdrawn in 2024 while they were under the EC’s penetrating “Phase II” scrutiny: the acquisition of robot vacuum cleaner maker iRobot by Amazon, and the merger of two Spanish airlines, IAG and Air Europa.
Typically, the EC addresses potentially anticompetitive mergers by requiring the divestment of overlapping businesses. In the case of Netflix and WBD, the likely divestment target would be HBO Max, which competes directly with Netflix in entertainment streaming. Paramount’s streaming service, Paramount+, also competes with HBO Max but not on the same scale as Netflix.
Antitrust rules aren’t the only possible pitfall for Netflix and Paramount. Others are the EU’s Digital Services Act and Digital Markets Act, which went into effect in 2022. The latter applies mostly to social media platforms—the six companies initially deemed to fall within its jurisdiction were Alphabet (the parent of Google), Amazon, Apple, ByteDance (the parent of TikTok), Meta and Microsoft. Those “gatekeepers” can’t favor their own services over those of competitors and have to open their own ecosystems to competitors for the good of users.
The Digital Services Act imposes rules of transparency and content moderation on large digital services. No platforms owned by Netflix, Paramount or WBD are on the roster of 19 originally named by the EU as falling under the law’s jurisdiction, but its regulations could constrain efforts by a merged company to move into social media.
The EU also has begun to show greater concern about foreign investments in strategic assets. Traditionally, these assets are those connected with national security. But defining them is left up to member countries. As my colleague Meg James reported, the sovereign funds of Saudi Arabia, Abu Dhabi and Qatar have agreed to back the Ellisons’ WBD bid with $24 billion — twice the sum the Ellison family has said it would contribute.
The Gulf states’ role has already raised political issues in the U.S., since the cable news channel CNN would be part of the sale to Paramount (though not to Netflix). Paramount says those investors, along with a firm associated with Kushner, have agreed to “forgo any governance rights — including board representation.”
That pledge aims to keep the deal out of the jurisdiction of the U.S. government’s Committee on Foreign Investment in the United States, or CFIUS, which must clear foreign investments in U.S. companies. But whether it would satisfy any European countries that choose to see Warner Bros. Discovery as a strategically important entity is unknown.
Then there’s Trump’s apparent favoring of the Paramount bid. Trump is majestically unpopular among European political leaders, who resent his pro-Russian bias in efforts to end Russia’s invasion of Ukraine. Trump has castigated European leaders as “weak” stewards of their “decaying” countries.
The administration’s recently published National Security Strategy white paper advocated “cultivating resistance to Europe’s current trajectory” and extolled “the growing influence of patriotic European parties,” which many European leaders interpreted as support for antidemocratic movements.
The document “effectively declares war on European politics, Europe’s political leaders, and the European Union,” in the judgment of the bipartisan Center for Strategic and International Studies.
How all these forces will play out as the bidding war for WBD moves toward its conclusion is imponderable just now. What’s likely is that the rumbling won’t stop at the U.S. border.
Dear Mr. Pelley:
I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.
Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.
Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.
Sincerely,
Nick Bilton
Executive Producer, 60 Minutes
The co-founder of Aspiration, Joseph Sanberg, was sentenced to 14 years in prison on Monday after defrauding investors and lenders of over $248 million.
The startup, an eco-friendly digital banking company boasting fossil fuel-free investments, carbon offsets for gas purchases, and a debit card with cash-back benefits for shopping at clean companies, was founded by Sanberg and Andrei Cherny. Cherny left the company in 2022 and has not been charged.
Sanberg, an Orange County native, pleaded guilty to wire fraud in October after being arrested in March last year. Aspiration subsequently filed for bankruptcy and liquidated all of its assets by July.
Sanberg and venture capitalist Ibrahim AlHusseini, who also faces charges, together forged a series of bank statements in order to obtain loans. From 2020 to 2021, the pair forged AlHusseini’s bank statements to show millions of dollars in assets in order to obtain millions of dollars from lenders.
Additionally, they forged a letter from their audit committee stating that $250 million in funds were available, when in reality Aspiration had less than $1 million. The amount of loans defrauded exceeded $248 million.
In 2021, Sanberg artificially inflated Aspiration’s 2021 revenue by $44 million by recruiting 27 fake customers to sign letters of intent pledging tens of thousands of dollars per month for tree planting services. Sanberg himself funded the contracts and used the inflated revenue numbers to obtain more loans.
The charges sparked an NBA investigation into salary cap allegations due to Aspiration’s connections with Clippers owner Steve Ballmer.
Ballmer personally invested $60 million in Aspiration, all of which was lost. He is now the target of a civil lawsuit alleging his participation in the scheme. Ballmer denies the allegations.
The team announced a $300-million sponsorship deal with Aspiration, and Clippers player Kawhi Leonard signed a four-year, $28-million marketing contract with the company, which reportedly performed no duties. The issue has raised concerns about how players are circumventing the NBA’s salary cap.
The team lost the $300-million sponsorship deal and an additional $20 million paid for carbon offset purchases.
Residents in the city of Monterey Park will be the first in the nation to vote on a permanent ban on data centers Tuesday.
If approved, Measure NDC would prohibit data centers within the city limits and could only be overturned by another vote.
Yard signs saying “No Data Center” in English and Chinese with images of dragons line sidewalks in the San Gabriel Valley city.
As a wave of data center opposition sweeps the country, numerous towns and counties across the U.S. have instituted temporary moratoria and other restrictions on the facilities. But only a handful have instituted indefinite bans, and just four other towns have sent related matters to the ballot.
Supporters are hoping the vote will set a precedent for the rest of the region, where residents are fighting proposals in Vernon and City of Industry.
“This is about as permanent a ban as we can get,” said Steven Kung, co-founder of the group No Data Center Monterey Park. “Winning Measure NDC would send a huge message to the rest of the San Gabriel Valley about how residents don’t want data centers.”
The ballot measure emerged from the fight against a 247,000-square-foot center proposed in 2024 by the Australian-owned investment firm HMC StratCap for a residential area in Monterey Park.
The facility would have sat less than 500 feet away from the nearest home and used three times the electricity of the 60,000-person, predominantly Asian American city.
While the developer touted the potential for jobs and tax revenue, residents expressed concerns about noise and air pollution, rising electricity rates and a potential to lower property values.
The company pulled its plans in late March following public outcry and a March 4 city council vote to extend a temporary data center moratorium and place a ban on Tuesday’s ballot.
In a letter to the city council, HMC StratCap said it would pursue a different use for the land and would not engage in a ballot measure fight.
The city council later banned data centers indefinitely, the first in California to do so, said Mayor Elizabeth Yang. But she’s still been out campaigning for the measure with all four other council members.
“If a council puts in an ordinance, a future council can reverse it too,” said Yang. “With the ballot measure, unbanning it is a lot harder because you need the entire city to vote on it.”
The measure proposes the ban “to protect air quality, drinking water resources, and public health” and “prevent impacts to electricity and water rates.”
While California places third in the country for existing data centers with about 300 facilities, it hasn’t been a hot spot in the recent AI-driven data center boom. High electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in Virginia, Texas, Georgia, Illinois or Arizona.
“Most of California’s data centers are small by today’s standards,” said Shaolei Ren, an engineering professor at UC Riverside who studies how to reduce the environmental impacts of data centers. “Ten years ago, they would be medium-sized, but the power demand for new AI data centers has increased a lot.”
The average operating data center demands 45 megawatts, according to the Washington Post, while the average planned one would draw 430 MW. The one proposed for Monterey Park would have required about 50 MW at peak demand.
As proposals crop up in SoCal, they’re met with fierce opposition. Montebello, El Monte and Baldwin Park have all enacted temporary moratoria, and Alhambra recently banned data centers as part of a zoning code update. City of Industry, Vernon, City of Commerce and Santa Fe Springs are moving in the other direction, trying to court developers and streamline data center approvals. Community groups are fighting that.
Outside the San Gabriel Valley, residents of Coachella and Imperial County are showing up in droves to protest local proposals.
Matthew Shaw, a volunteer with the Coalition for Responsible Data Center Development, who recently published a report on opposition to AI data centers, said a vote to ban them in Monterey Park “would lead to copycats, partially because so many groups are just opposed to any data center development at all.”
While there is no formal opposition to Measure NDC, some building trades like Ironworker Local 433 supported the Monterey Park data center when it was still live before city council. Those in the data center industry are lamenting the state of public opinion.
“These are multi-billion-dollar assets that are built by multi-trillion-dollar companies. These things will get done,” said Mehdi Paryavi, chairman of the International Data Center Authority. “My biggest problem is that our industry does not invest enough in community engagement.”
Paryavi said towns that seek to limit data centers are missing out on thousands of jobs generated by data center construction, operations and customers, as well as faster artificial intelligence speeds and better performance.
Kung said local community organizers are “looking at the empirical evidence” and seeing a ban as a win.
“We’ve never seen a city that embraces a data center and is like, ‘Look how our quality of life has increased, look how all the revenue has gone into citywide improvements,’” he said. “That just doesn’t exist.”
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