LAS VEGAS (KTNV) — A Las Vegas woman is suing Netflix and claiming that a proposed merger with Warner Bros. Discovery will hurt customers, according to a new federal lawsuit.
The class action lawsuit was filed on Monday by Michelle Fendelander, which states she is an HBO Max subscriber and has never subscribed to Netflix.
"In the past few years, after the SVOD (Subscription Video On Demand) Market emerged post-pandemic with a handful of dominant products — Netflix, Amazon Prime, HBO Max, Disney+, Hulu, and Paramount Plus — market prices have begun to soar, with service quality and output stagnant or degraded," the lawsuit states in part. "All this while SVOD subscription prices — including for Netflix and for HBO Max — have soared far beyond inflation in recent years and more than doubled in less than a decade."
WATCH: Streaming shake-up: Netflix to absorb Warner Bros. and HBO in $82.7 billion deal
The lawsuit also states the merger would create the "broadest, most unique and most 'must-have' content library" but the market might not be able to handle another streaming service consolidation. You may remember that Disney+ and Hulu have already combined their services and Warner Bros. and Discovery previously combined their services.
"The Netflix-WBD merger would greatly strengthen the CSBE (Content and Subscriber Barrier to Entry) surrounding the U.S. SVOD Market, and at the same time would massively increase concentration in an already calcified and oligopolistic market — a market that has responded to past consolidation with aggressive marketwide price hikes and quality degradation," the lawsuit states. "American consumers — including SVOD purchasers like Plaintiff, an HBO Max subscriber — will bear the brunt of this decreased competition, paying increased prices and receiving degraded and diminished service for their money."
On Friday, Netflix and Warner Bros. Discovery announced they had entered into a definitive agreement under which Netflix will acquire Warner Bros., including its film and television studios, HBO Max and HBO.
According to a press release, Netflix stated the merger would offer more choice and greater value for customers, enhance Netflix's studio capabilities, create better value for talent and create more value for shareholders.
"This acquisition will improve our offering and accelerate our business for decades to come," said Greg Peters, co-CEO of Netflix. "Warner Bros. has helped define entertainment for more than a century and continues to do so with phenomenal creative executives and production capabilities. With our global reach and proven business model, we can introduce a broader audience to the worlds they create — giving our members more options, attracting more fans to our best-in-class streaming service, strengthening the entire entertainment industry and creating more value for shareholders.”
A report from Bloomberg states the company's current agreed acquisition includes $59 billion of temporary debt financing from Wall Street banks. They also state Netflix plans to "eventually replace that with as much as $25 billion of bonds, $20 billion of delayed-draw term loans, and a $5 billion revolving credit facility. Some will probably also be paid down with cash flow."
On Monday, Paramount launched a $77.9 billion hostile takeover offer for Warner Bros. Discovery. Paramount states their deal is better for shareholders and could pass regulators easier. For context, a hostile takeover happens when a company attempts to acquire another by going around the target's management and making an appeal directly to shareholders.
WATCH: Paramount goes hostile in bid for Warner Bros., challenging bid by Netflix
The Warner Bros. Discovery board of directors stated they would review Paramount's offer but were not going to modify their recommendation with respect to Netflix, according to a report from Reuters. Paramount's offer includes financing from Affinity Partners, an investment firm run by Jared Kushner, President Donald Trump's son-in-law, and several Middle Eastern government-run investment funds. The person leading Paramount is David Ellison, who is the son of billionaire Larry Ellison, who has ties to the White House.
A Wall Street Journal report states Larry Ellison called Trump after the Netflix deal was announced and said the transaction would hurt competition.
Regardless of which company wins the bid to acquire Warner Bros. Discovery, they still have to get approval from lawmakers and regulators in order for the deal to go through.
Lawmakers on both sides of the aisle have already spoken out about it.
“Netflix is a great company. They’ve done a phenomenal job. Ted is a fantastic man,” President Trump said of Netflix CEO Ted Sarandos, noting that they met in the Oval Office last week before the deal was announced on Dec. 5. "I have a lot of respect for him but it’s a lot of market share, so we’ll have to see what happens ... There's no question about it. It could be a problem."
U.S. Representatives Sam Liccardo (D-Calif.) and Ayanna Pressley (D-Mass.) have expressed "serious national security concerns" over Paramount's bid and on Wednesday, they sent a letter to Warner Bros. Discovery president and CEO David Zaslav, the company's board of directors and U.S. Treasury Secretary Scott Bessent.
"Any transaction providing foreign investors with governance rights, access to non-public data, or indirect influence over content distribution creates vulnerabilities that foreign governments could exploit," the letter reads in part. "Should Warner pursue negotiations with Paramount Skydance or any other buyer financed by foreign sovereign investors, the company will file a voluntary notice with CFIUS prior to executing any binding agreement. Moreover, if CFIUS identifies risks requiring mitigation, we expect Warner to commit to implementing those measures in full and to inform shareholders, Congress, and the public of the steps taken to safeguard national security."
If neither deal goes through, Netflix could be stuck paying a $5.8 billion penalty in the form of a breakup fee.
As for next steps with the federal lawsuit, federal court records show an initial case management conference is scheduled for March 18, 2026.