Over 30 Democratic members of Congress are raising their concerns about cable programming giant Discovery’s proposed $43-billion takeover of WarnerMedia. Attorney General Merrick Garland and Assistant Attorney General Jonathan Kanter said in a letter that the proposed consolidation “raises significant antitrust concerns” and warranted a thorough investigation from the U.S. Department of Justice’s antitrust division. The letter from the lawmakers is the first instance of pushback against the deal.
The letter, primarily drafted by four lawmakers — Rep. Joaquin Castro (D-Texas), Rep. David N. Cicilline (D-R.I.), Sen. Elizabeth Warren (D-Mass.), and Rep. Pramila Jayapal (D-Wash.), stated, “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.” Rep. Alexandria Ocasio-Cortez (D-N.Y.), Rep. Jamie Raskin (D-Md.), Rep. Zoe Lofgren (D-San Jose), and Ted W. Lieu (D-Torrance) signed the letter as well.
In May, AT&T and Discovery made the merger agreement official. A combination that would see AT&T shareholders own 71% of the new entity, and AT&T will receive $43-billion in cash, debt securities, and retention of WarnerMedia’s debt. The deal is expected to close in mid-2022.
WarnerMedia, along with Discovery Chief Executive David Zaslav have previously argued the deal is not anti-competitive. They said that Discovery is significantly smaller than WarnerMedia, which owns CNN, HBO, Cartoon Network, and the Warner Bros. television and film studio. The merger will not reduce the number of Hollywood studios because Discovery does not own a studio that focuses on scripted content. Discovery owns the channels Animal Planet, Investigation Discovery, TLC, Food Network, and HGTV. Whereas WarnerMedia produces big-budget franchises like “Game of Thrones” and “Wonder Woman,” Discovery prioritizes lower-budget “nonfiction programming.”
Another reason for concern proposed by the letter stated that the Discovery-WarnerMedia union might further limit media opportunities for Latinos. The letter noted, “The media and entertainment industry already suffers from a lack of Hispanic representation in its workforce… Economic justice cannot be realized without ensuring that all communities — especially low income and minority communities — are protected from the exploitation and abuse that often accompanies concentrated economic power.”
A recent study, published by the U.S. Government Accountability Office, shows that on average, only 11% of jobs across 13 different media occupations were held by Latino employees. In addition, a study by USC Annenberg Inclusion Initiative, Stacy Smith, and partners Eva Longoria’s UnbeliEVAble Entertainment and Wise Entertainment discovered that just 7% of 2019’s top-grossing titles had a Latino lead.
Lastly, the lawmakers remark that post-merger companies have unfulfilled promises regarding delivering value to consumers. They state that “all too often the merging parties have failed to deliver benefits and broken promises made to the public, to Congress, and to antitrust enforcers.”
There is no word if the new entity would have an advantage in a pricing battle with live streaming services like Philo and fuboTV as they do not have WarnerMedia stations. There’s always a possibility that the mega-company will price itself significantly higher for YouTube TV or Hulu Live TV viewers. We also don’t know if HBO Max and discovery+ will be combined or bundled separately.