Lawmakers seek review of Warner Bros. Discovery deal

Four Democrats in Congress have asked the US Department of Justice to review the Warner Bros. Discovery (WBD) merger over concerns that the media giant's market share "has enabled it to harm workers and heighten barriers to entry in the media and entertainment industry."

Those concerns and a call for the DoJ to reassess the deal enter the picture roughly a year after Discovery and WarnerMedia completed the merger and quickly followed with a wide range of cutbacks on movie titles, content projects and people. The deal has saddled WBD with more than $50 million in debt, causing the company to manage that load and prioritize cost-cutting, the Los Angeles Times reports.

Figure 1: (Source: Timon Schneider/Alamy Stock Photo)

Sen. Elizabeth Warren (D-MA), Rep. Joaquin Castro (D-TX), Rep. David Cicilline (D-RI) and Rep. Pramila Jayapal (D-WA) raised their concerns in a letter to Attorney General Merrick Garland and DoJ antitrust chief Jonathan Kanter. In the letter, dated Friday, April 7, they argue that the merger of WarnerMedia and Discovery "appears to have enabled" WBD to "adopt potentially anticompetitive practices that reduce consumer choice and harm workers in affected labor markets."

The letter makes note of a wave of recent job cuts following the merger, the abrupt shut-down of the CNN+ streaming service and the cancellation of several titles, including Batgirl, Gordita Chronicles, Demimonde and The Time Traveler's Wife.

"In total, the aforementioned cuts affected thousands of people. Notably, WBD still has $3.5 billion in planned cuts – which does not bode well for workers," the letter reads. "The company has the incentive and ability to eliminate broad swaths of its workforce, leaving workers with fewer choices for employment and advancement."

"WBD's new ownership is hollowing out an iconic American studio," the members of Congress argued.

Concerns extend to combined streaming product

They also pointed to concerns about WBD's plans to combine HBO Max and Discovery+ into one streaming platform, wondering if a lower-priced tier of the platform will reduce the quality of the current product. Late last year, reports surfaced that WBD was considering "Max" as the name for a streaming service brand that combines HBO Max and Discovery+. Details about that plan are expected to be shared this Wednesday (April 12) when WBD hosts a streaming product press event.

Rather than asking directly that the deal be unwound, the Congress members want the DoJ to investigate the state of competition in affected labor and consumer markets following the deal along with a broader probe into the competitive consequences of the merger.

But if the deal is found to result in "dramatically less available content and discourages innovation, the merger should be reassessed," they added.

While it's unclear whether the DoJ would attempt to unwind a deal already approved by regulators, Castro told the Los Angeles Times that the department should at least look at the WBD merger as an example of why certain deals shouldn't be approved.

WBD has been asked for comment on the letter.

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— Jeff Baumgartner, Senior Editor, Light Reading