Four Democratic lawmakers want the Justice Department to investigate Warner Bros Discovery, claiming that the merged company has harmed workers and reduced consumer choice.
Sen. Elizabeth Warren (D-CA), Rep. Joaquin Castro (D-TX), Rep. David Cicilline (D-RI) and Rep. Pramila Jayapal (D-WA) wrote in a letter to Attorney General Merrick Garland and DOJ antitrust chief Jonathan Kanter that the merger “appears to have enabled” the company to “adopt potentially anticompetitive practices that reduce consumer choice and harm workers in affected labor markets.”
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WarnerMedia and Discovery were combined last year in a transaction that was not challenged by the DOJ after a review.
“The company has the incentive and ability to eliminate broad swaths of its workforce, leaving workers with fewer choices for employment and advancement,” the lawmakers wrote in their letter (read it here). They cited the layoffs over the past year, including the shutdown of CNN+, as well as later cuts at CNN and in areas like ad sales.
It would be unusual for the Justice Department to essentially reopen a review of a merger so shortly after it has been completed, but the lawmakers appear to have been bolstered by Kanter’s comments on the DOJ’s concerns over the impact of consolidation on content creators and workers, not just on consumers.
Last year, the Justice Department successfully challenged the proposed Penguin Random House merger with Simon & Schuster on the grounds that it would ultimately harm authors. After a federal judge ruled in the government’s favor, the companies abandoned that transaction.
Arguing that the merger has led to the “hollowing out” of an “iconic American studio,” the lawmakers also cited the cancellation of projects and the removal of content from the HBO Max platform. They wrote that “audiences will never see such projects like Batgirl, a $90 million film that was canceled while ‘deep into post-production,’ despite consumer outcry, reportedly to allow WBD to claim a tax break.”
A Warner Bros Discovery spokesperson declined comment. The company is not unique in embarking on recent mass layoffs. Disney last month started the process of cutting 7,000 from its workforce. And amid a retrenchment in streaming, other platforms including Netflix have been canceling projects and series.
The cancellation of Batgirl got huge attention last August, leading to some anger in the fanbase. Peter Safran, the new co-chairman and CEO of DC Studios, said in February that the movie was “not releasable.”
The lawmakers also referred to plans to raise the cost of HBO Max. “Currently, the plan for the combined streaming service is to keep an ad-supported plan at ten dollars and an ad-free plan between $15 and $16 a month. However, WBD is offering a premium plan for consumers that will cost $20 a month ‘for viewers who want to view HBO’s signature shows in as high a quality as possible.’ 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.”
Warner Bros Discovery is planning to unveil its new strategy for direct-to-consumer streaming next Wednesday.
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