A group of Democratic Congress members has sent a letter urging the Justice Department to conduct a post-merger review of the WarnerMedia-Discovery deal because of actions by Warner Bros. Discovery.
Since Discovery acquired WarnerMedia from AT&T, the new company has done things that have heightened barriers to entry for workers in the media and entertainment industry, hurt competition for industry workers and reduced choice for media consumers, the legislators assert.
The letter does not call for the Justice Department to break up Warner Bros. Discovery but it could make further consolidation more difficult.
“We also hope that the competitive consequences resulting from the WarnerMedia-Discovery merger inform updates to the merger guidelines to ensure that the guidelines reflect the needs of workers, consumers and content creators in the media and entertainment industry,” the letter said.
The letter was signed by Sen. Elizabeth Warren (D-Mass.); Rep. David Cicilline (D-R.I.), ranking member of the House Judiciary Subcommittee on the Administrative State, Regulatory Reform and Antitrust; Rep. Pramila Jayapal (D-Wash.), chair of the Congressional Progressive Caucus; and Rep. Joaquin Castro (D-Texas).
Warner Bros. Discovery declined to comment, but it is not the only company in the entertainment space moving to cut costs and reduce the amount of content available to consumers.
The Walt Disney Co. is in the process of laying off 7,000 employees and Netflix said it was cutting back on movie production...
In the letter, the legislators say that Warner Bros. Discovery’s cost-cutting efforts have hurt employees and consumers of video content. It asserts that Warner Bros. Discovery has been able to make these moves because the merger created less competition in the industry.
The merger “enabled the combined WBD to take aggressive measures, harming workers and creatives in the media and entertainment industry while eliminating the disciplining forces of competition that provide workers with the freedom to change jobs or negotiate for better pay and working conditions … WBD’s aggressive measures post-merger indicate that current competition in the media and entertainment industry is inadequate. The company has the incentive and ability to eliminate broad swaths of its workforce, leaving workers with fewer choices for employment and advancement,” the letter said.
The letter notes layoffs conducted at WBD. It also notes titles that were in production and canceled after the merger was approved and consummated, including Batgirl, Gordita Chronicles, Demimonde and The Time Traveler’s Wife.
It also notes that WBD shut down the new CNN Plus streaming service, a move that affected about 350 employees. It notes that the company will also be combining HBO Max and Discovery Plus into one streaming platform.
“This leaves questions unanswered about whether a lower-priced platform will have reduced quality from the current product — while consumers are paying the same price and lack the transparency necessary to fully evaluate the plans and their relative prices,“ the letter says. ”With fewer alternatives available to consumers, there is less competitive pressure on WBD to innovate or provide a variety of quality content.
"The antitrust laws seek to promote consumer choice, product variety, and industry innovation,“ the lawmakers wrote. “Accordingly, if a consummated merger results in dramatically less available content and discourages innovation, the merger should be reassessed.
“WBD’s new ownership is hollowing out an iconic American studio,” the letter said. “We respectfully request that the Department take another look at the transaction, considering WBD’s post-transaction conduct.”
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Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.