LOS ANGELES — Paramount Skydance accused Netflix of launching a "scorched-earth campaign" against its prospective purchase of Warner Bros. Discovery in a letter to the U.S. Department of Justice — delivering one of its sharpest rebukes yet of its once-rival bidder for the company while pushing back against labor concerns about the deal.
In the letter obtained by POLITICO, Paramount’s chief legal officer claimed that Netflix has attempted to "poison regulators and other stakeholders against” the deal — and alleged the company’s “panic-level response” demonstrated “just how seriously Netflix takes Paramount as a scaled competitor.”
The claim was aired in a June 5 letter responding to a March report filed by the International Brotherhood of Teamsters with the Justice Department’s Antitrust Division. The union, which includes 15,000 rank-and-file Motion Picture Teamsters — members who serve as drivers, location personnel and in other behind-the-scenes roles — argued Paramount's purchase of its rival "poses a direct threat to film and television workers nationwide." The Teamsters have urged the Justice Department to sue to block the deal unless “substantial and enforceable safeguards are put in place to increase domestic production and protect jobs.”
But Paramount Skydance responded that its prospective purchase of Warner Bros. Discovery would create more work for Teamsters and other unionized Hollywood workers. In the letter, Makan Delrahim, the Paramount legal executive, argued that organized labor will “directly benefit” from the $111 billion deal, which he said would foster “new competitive energy and increased content investment.”
“Paramount acquiring WBD will not reduce work opportunities for the Teamsters or other organized labor,” wrote Delrahim, formerly the Justice Department’s top antitrust regulator during President Donald Trump’s first term.
Netflix, which backed out of the bidding war to buy Warner Bros. in February, did not immediately respond to a request for comment. Nor did the Teamsters. Paramount declined to comment.
In March, the Teamsters said that past Hollywood mergers have harmed workers, and cited Walt Disney Co.'s 2019 purchase of the 20th Century Fox film studio — it was part of Disney's $71 billion acquisition of assets from 21st Century Fox — saying it led to job losses and the cancellation of projects.
But Delrahim's letter pushed back on that portrayal of the deal, arguing, in part, that Disney has increased spending on "producing content overall" since its purchase of 20th Century and that any discussion of the company's film output must take into account the effects of the Covid-19 pandemic, which disrupted the entertainment industry about a year after that sale closed.
Delrahim again pointed the finger at Netflix, alleging that the company "has tried to persuade the Teamsters and other stakeholders that Disney’s acquisition of Fox had a negative impact on content production and labor opportunities."
It was not the first time Delrahim has had strong words for Netflix. In January, when the streaming juggernaut had a potential deal in place to acquire Warner Bros., he told a House subcommittee that the now-scuttled merger was “clearly anticompetitive, and not a close call.” And last week he told the Los Angeles Times that unnamed people were trying to “inflict harm on this transaction.”
But the remarks in his letter stood out for being especially pointed — and for their inclusion in a communication with the Department of Justice.
In his letter, Delrahim reiterated Paramount’s plans for increased production. The company, helmed by CEO David Ellison, has repeatedly said the combined studio would release at least 30 movies a year while also upping TV output.
“Paramount’s content strategy aligns directly with the Teamsters’ interests,” Delrahim said in the letter, which was also sent to Teamsters leaders. “More films and series in production means more call sheets, more location days, more transportation, casting, and catering work. The combined company will have no incentive to shrink the production engine that drives its competitiveness. Increasing production volume is the central pillar of how Paramount intends to compete.”
For months, many in Hollywood have agonized over the proposed acquisition, which some fear could trigger mass layoffs. On a conference call with analysts in March, Paramount COO Andy Gordon said the company expected there to be more than $6 billion in synergies within three years of the deal closing, and that the “majority of our synergy target comes from non-labor sources.”
While the Justice Department reviews the transaction, California Attorney General Rob Bonta is also scrutinizing the acquisition, and has said it is “not a done deal.” Paramount has said it expects the sale to close by the third quarter, though some reports have suggested it could be completed as soon as July.
Paramount’s purchase of Warner Bros., which the latter company’s shareholders approved in April, could lead to a realignment of the studio ecosystem. As part of the deal, Paramount, whose TV shows include “Yellowstone” and “Star Trek: Strange New Worlds,” would combine its Paramount+ streaming service with Warner Bros. Discovery’s similar HBO Max offering. The enlarged streaming venture would boastabout 200 million subscribers, according to estimates.
Delrahim said that the combined company — whose unified streaming service he projected as the fourth-largest today — would be able to better compete with rivals including Netflix, which said in January that it had more than 325 million subscribers.
“The Transaction’s positive impacts on organized labor flow naturally from the business logic that drives the underlying deal,” Delrahim wrote. “Paramount wants to combine with WBD to create a stronger, more efficient competitor that will operate at scale and take on Netflix and the other streaming giants. Content is the ‘fuel’ that drives Paramount’s ability to compete.”
He also said that the combining of Paramount and Warner Bros. “presumably will spur other production opportunities,” suggesting that companies including Netflix, Amazon, Disney and Apple would “need to respond in kind” by beefing up their own output.
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