Discovery’s proposed $43-billion acquisition of WarnerMedia is meeting some resistance as it goes through the regulatory approval process.
On Monday, more than 30 Democratic members of Congress sent a letter to U.S. Attorney General Merrick and Department of Justice antitrust chief Jonathan Kanter urging that the DoJ “conduct a thorough review of this transaction to ensure that it does not harm American consumers and workers by illegally harming competition.”
The outreach was led by U.S. House member Joaquin Castro of Texas, Sen. Elizabeth Warren of Massachusetts, Rep. David Cicilline of Rhode Island (chair of the House Antitrust Subcommittee) and Rep. Pramila Jayapal of Washington (chair of the Congressional Progressive Caucus). The letter is also signed by Sen. Ben Ray Luján of New Mexico, Rep. Alexandria Ocasio-Cortez and Rep. Jamaal Bowman of New York, among others.
“This transaction raises significant antitrust concerns,” says the letter. The merger “threatens to enhance the market power of the combined firm and substantially lessen competition in the media and entertainment industry, harming both consumers and American workers.”
“Competitive markets create more high-quality jobs and give workers more freedom and flexibility to change jobs and negotiate for better pay and working conditions,” it states. “Furthermore, in the absence of competition, the rise of employers’ market power reduces the power of workers to “voice and exit,” increasing their risk of exploitation.”
Pointing to a recent Government Accountability Office report and other sources documenting a lack of diversity in the media and entertainment industries — and a lack of representation of Latinx workers and executives in particular — the lawmakers argue that “additional consolidation is likely to eliminate competition for these workers and reduce the number of employment opportunities for Hispanic individuals looking to enter the industry.”
The letter also urges the DoJ to “thoroughly examine” whether the merger “will reduce the amount of diverse and inclusive media and entertainment content available to consumers.”
“Consumers increasingly want diverse film and television content that reflects our diversifying nation,” the lawmakers wrote. “However, today’s media and entertainment marketplace is not providing consumers with the content they want, as people of color continue to be underrepresented in the cable, broadcast, and streaming video programming available to Americans.”
The letter cites a 2020 Nielsen report that found that Hispanics’ share of screen time across all television was 5.5%, or only one-third of their makeup in the population (18.8%).
In response, during yesterday’s UBS technology and media conference, AT&T John Stankey said that the concerns expressed in the letter are “really unfounded.
“Having been through a number of these [transactions] in my career, getting letters from members of Congress is not unusual … When you have a lot of members of Congress, there’s always going to be those that have a different lens they want to put on something,” he added.
The letter lands as the DoJ and the Federal Trade Commission hold a workshop about competition in labor markets, and amid “chatter that industry concerns about the market clout that Disney now flexes across the global entertainment eco-system since its 2019 merger with 21st Century Fox could encourage Biden’s Justice Department to take a hard look at the Discovery-WarnerMedia combo,” notes Variety.
The deal, with an enterprise value of more than $100 million, would bring together Discovery’s global business of lifestyle and how-to content via streaming and TV networks, with Warner Bros., HBO and HBO Max, CNN, TNT, TBS and other Turner networks.
Earlier this year, some Republicans joined Democrats in objecting to Amazon’s proposed acquisition of MGM.
However, antitrust law experts have said it is highly unlikely that that transaction could be successfully challenged, because MGM has a small share of box office, and the streaming services market is at this juncture highly competitive.
Furthermore, in an ironic turn, although the political climate is quite different at the moment, the DoJ is likely to be wary of such legal challenges, having lost its attempt to stop the merger of AT&T and Time Warner in 2019.