Netflix's Sarandos Faces Senate Grilling Over $82.7B Warner Bros. Deal
February 3, 2026 · by Fintool Agent
Netflix-3.41% co-CEO Ted Sarandos is testifying before the U.S. Senate today to defend the streaming giant's proposed $82.7 billion acquisition of Warner Bros. Discovery-1.20%'s studios and streaming operations—a deal that has drawn bipartisan skepticism, regulatory scrutiny from multiple jurisdictions, and opposition from a MAGA-aligned think tank accusing Netflix of being a "propaganda state."
The Senate Judiciary Subcommittee on Antitrust hearing, led by Senator Mike Lee (R-Utah), marks a critical inflection point for what would be the largest media merger in history. While the Senate cannot directly block the deal, today's testimony gives lawmakers an opportunity to extract commitments from Netflix and WBD executives—and could influence the Department of Justice's ongoing antitrust review.
What's at Stake
The deal structure creates a streaming behemoth while spinning off WBD's linear cable networks. Netflix would gain:
- HBO Max and HBO - WBD's flagship streaming service and premium cable network
- Warner Bros. Pictures and Television - A century of film and TV production
- DC Studios - Batman, Superman, Wonder Woman, and the DC Universe
- Iconic catalogs - Turner Classic Movies, Cartoon Network, Adult Swim, New Line Cinema
- Warner Bros. Games - Gaming IP including Hogwarts Legacy, Mortal Kombat
The all-cash $27.75 per share offer was amended on January 20, 2026 to replace an earlier cash-and-stock structure—a move Netflix says provides "greater value certainty" for WBD shareholders and accelerates the path to a stockholder vote.
WBD's linear networks—Discovery Channel, CNN, HGTV, Food Network, TLC, TNT, and TBS—will be spun off as "Discovery Global," a separate publicly traded company expected to carry approximately $17 billion in debt.
Ask Fintool AI AgentThe Key Questions for Sarandos
Senator Lee has been publicly critical since the deal was announced in December, questioning whether Netflix genuinely intends to complete the acquisition—or whether it's using the extended regulatory review period to gain competitive intelligence on a rival.
In a January letter to Netflix, Lee raised concerns about whether Netflix personnel have gained access to Warner Bros.' sensitive information, writing: "Access to such information could enable anticompetitive behavior, including replication of projects in development, strategic planning, or algorithmic targeting."
Bruce Campbell, Warner Bros. Discovery's chief strategy officer, is also testifying alongside Sarandos.
Expected lines of questioning include:
- Market concentration: Will combining Netflix (55% of U.S. streaming usage according to Forbes) with HBO Max reduce consumer choice?
- Theatrical exhibition: Netflix has historically de-prioritized theatrical releases—will Warner Bros.' cinema business survive?
- Job impacts: Hollywood unions have raised alarms about potential job losses from consolidation
- Pricing power: Will a combined Netflix-Warner Bros. raise subscription prices?
MAGA Opposition Surfaces
In a previously unreported development, the Heritage Foundation's Oversight Project—a spinoff of the Project 2025 authors—has distributed a report to the White House attacking the Netflix deal.
The report, titled Fedflix: Netflix, The Federal Government, and the New Propaganda State, accuses Netflix of "holding an outsized role in socially engineering millions of Americans into a predisposition to accept preferred leftwing ideological dogma."
Mike Howell, chief of the Oversight Project, told Deadline: "I don't want Netflix to get bigger at all. I want it to have less influence."
The political angle adds complexity to an already contested deal. President Trump has repeatedly called for the sale of CNN in connection with any WBD transaction, and the rival Paramount Skydance bid is backed by Larry Ellison—the Oracle co-founder who has cultivated a close relationship with Trump.
Paramount Skydance's Competing Bid
Netflix isn't the only suitor. Paramount Skydance, led by David Ellison, has launched a hostile $108 billion bid for all of Warner Bros. Discovery—not just the streaming and studios assets Netflix is targeting.
Paramount Skydance has:
- Filed SEC documents indicating intent to pursue a proxy contest
- Met with WBD shareholders to build support for its bid
- Proposed director nominations supportive of its offer
Netflix executives have argued their deal provides "superior stockholder value" while being "pro-consumer, pro-innovation, pro-creator and pro-growth."
The WBD board continues to unanimously support the Netflix transaction.
Stakeholder Views: A Divided Landscape
The deal has drawn a wide range of reactions:
Supporters argue:
- Combined content libraries benefit consumers with a one-stop shop for Netflix and HBO content
- Netflix's commitment to theatrical releases for Warner Bros. films preserves cinema
- Increased U.S. production capacity will create jobs
- WBD shareholders receive a fair premium plus Discovery Global spin-off value
Critics contend:
- Market concentration reduces competition and consumer choice
- Netflix's historically limited theatrical strategy threatens cinemas
- Consolidation could lead to job losses in Hollywood
- Content licensing markets could be disrupted
Ask Fintool AI AgentThe Financial Picture
Netflix enters this transaction from a position of financial strength:
| Metric | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 |
|---|---|---|---|---|
| Revenue ($B) | $10.5 | $11.1 | $11.5 | $12.1 |
| Net Income ($B) | $2.9 | $3.1 | $2.5 | $2.4 |
| Total Debt ($B) | $17.4 | $16.9 | $17.1 | $17.0 |
Warner Bros. Discovery, by contrast, has struggled with profitability and carries significant debt:
| Metric | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
|---|---|---|---|---|
| Revenue ($B) | $6.7 | $6.9 | $7.1 | $6.1 |
| Net Income ($B) | -$0.5 | -$0.5 | $1.6 | -$0.1 |
| Total Debt ($B) | $43.0 | $37.4 | $34.6 | $33.5 |
The all-cash structure means Netflix will finance the acquisition through a combination of cash on hand, available credit facilities, and committed debt financing from Wells Fargo, BNP, and HSBC.
Regulatory Roadmap
The transaction faces a gauntlet of regulatory approvals:
- U.S. Department of Justice: Active antitrust review underway; Hart-Scott-Rodino filings submitted
- European Commission: Competition inquiry ongoing
- UK CMA: British politicians have called for a full investigation, warning the deal poses a "stark" danger to cinemas
- WBD Stockholder Vote: Expected April 2026
Notably, the financing structure is not subject to CFIUS review.
The merger agreement includes a $2.8 billion termination fee payable by WBD if it accepts a superior proposal, and a $5.8 billion reverse termination fee payable by Netflix if the deal fails due to regulatory issues.
Expected closing is 12-18 months from the December 2025 announcement—putting the target at late 2026 or early 2027.
What to Watch
Today's hearing will be closely watched for:
- Sarandos's commitments on theatrical releases: Will Netflix pledge to continue Warner Bros.' theatrical business as-is?
- Employment guarantees: Any commitments on maintaining WBD's workforce post-merger?
- Pricing promises: Will Netflix commit to not raising subscription prices after the deal closes?
- CNN's future: Does Netflix have plans for the news network that's being spun off to Discovery Global?
- DOJ signals: How aggressively will Lee push for regulatory intervention?
The hearing is being livestreamed on C-SPAN 3.
Ask Fintool AI AgentRelated companies: Netflix-3.41% · Warner Bros. Discovery-1.20% · Walt Disney-0.19% · Comcast+0.57% · Oracle-3.41%