Does it please the dictator?

The Netflix/Paramount battle for Warner Bros. reveals something rotten

The very public Donald Trump–Elon Musk feud earlier this year captured widespread attention, and for good reason. Beyond personalities, the two men — one the world’s most powerful, the other its richest — had been collaborating in ways that threatened the very nature of US state capacity and dismantled vital government institutions, most visibly USAID, the world’s largest foreign aid agency.

Some expressed hope that Musk would face severe consequences for breaking with Trump, perhaps the loss of lucrative government contracts for his firms, particularly SpaceX. Yet while superficially satisfying, this would have been a deeply dangerous outcome. In any functioning democracy, success in business ought not depend solely on one’s relationship with the leader.

It may seem a minor point in the context of what could be the dying embers of the last liberal hegemony, but this sort of thing is not good for the economy. We see it with regards to China, where there are hard limits to growth. Not because the Chinese people cannot manufacture world-class goods or provide high-value services, but because the CCP’s number one priority is to maintain the monopoly power of the CCP.

Further economic liberalisation risks that stranglehold, because a flourishing private sector is where independent sources of wealth and power are created. And something so dangerous cannot be allowed to stand. And the same dynamics that constrain growth in China are increasingly visible in American capitalism, as recent battles over media mergers illustrate.

A hostile takeover

The United States is no stranger to political corruption and economic coercion. But the proposed takeover of Warner Bros. suggests something important has shifted. On Friday, Netflix announced that it had agreed to purchase Warner Bros., including its film and television studios, HBO Max and HBO, for approximately $82.7bn, subject to regulatory approvals.

That final caveat would be important for any such takeover. Regulators might reasonably be concerned about one company possessing so great a market share in such a vital industry. Complicating matters further, Paramount has made its own offer for Warner Bros. But here is where things get, well, icky.