• by Karlene Lukovitz , April 10, 2023

Four Democratic lawmakers are asking the Department of Justice to reassess the $43-billion, year-old merger of Discovery and AT&T’s WarnerMedia.

Rep. Joaquin Castro (Texas), Sen. Elizabeth Warren (Mass.), Rep. David Cicilline (R.I.) and Rep. Pramila Jayapal (Wash.) last week sent a letter urging the DOJ to “investigate the state of competition in affected labor and consumer markets following the consummation of this merger, which appears to have enabled Warner Bros. Discovery to adopt potentially anticompetitive practices.”

The reduced competition in the marketplace as a result of the newly formed company has allowed 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,” the lawmakers contend.

CEO David Zaslav promised investors $3 billion in annual cost reductions to help defray the $50 billion in debt left on the new company’s balance sheet.

WBD has made cost-saving cancellation decisions that “limit consumer and worker choice,” the lawmakers assert.

Those include shutting down CNN+ a month after its launch; cancelling numerous projects, including the nearly-completed $90-million HBO movie “Batgirl,” HBO Original “Demimonde,” and the HBO Max series “Gordita Chronicles”; squelching development of “Whistleblower” and other projects; and reducing original content at CNN, TNT and TBS.

“The damage to content creators whose projects are cancelled in deep development and post-production cannot be overstated,” said the letter. “Such cancellations stain these projects, making them less appealing and marketable to other buyers — consumers will likely never be able to watch shows purchased then cancelled by WBD. WBD’s conduct amounts to a de facto ‘catch and kill’ practice, vastly limiting consumer choice.”

WBD reportedly has laid off thousands of employees globally, including in ad sales and at HBO Max and CNN.

The CNN division dropped original programming for the HLN news channel and replaced “Morning Express” news with a simulcast of “CNN This Morning,” among other cost-cutting moves. The CNN programming cuts "illustrate that WBD "is trying to sustain its entertainment business at the expense of news and journalism," the lawmakers assert.

WBD has also adjusted its executive compensation packages to incentivize cost cutting and incremental revenue gains with stock awards, according to The Hollywood Reporter, which also notes that Zaslav’s own restricted stock units could see their target value of $12 million doubled if he overdelivers on cash flow efforts.

WBD has not responded to press requests for comment on the letter to the DOJ.

Agencies have argued that they have the authority to revisit mergers they have previously approved when anticompetitive effects can be demonstrated. The DOJ is already challenging Google’s acquisitions of DoubleClick and AdMeld, and the Federal Trade Commission is now challenging Meta’s acquisitions of Instagram and WhatsApp.