Warner Bros. Discovery merger investigated by DOJ

The Justice Department has been contacted by four Democratic lawmakers who have asked it to launch an investigation into alleged anti-competitive behavior on the part of Warner Bros. Discovery. There are several Democratic representatives who have written letters that state that the merged company has harmed workers and has reduced consumer choices, including Elizabeth Warren, Pramila Jayapal, David Cicilline, and Joaquin Castro. In April 2022, WarnerMedia merged with Discovery Inc. to form Warner Bros. Discovery.

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“It is our respectful request that the Justice Department investigate the state of competition in labor markets and consumer markets following the completion of this merger, as we believe that this merger has enabled Warner Bros. Discovery (WBD) to adopt potentially anticompetitive practices that are likely to lead to a reduction in consumer choice and a negative impact on workers," said the lawmakers in the letter.

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A request for comment from Trade Algo was not responded to by Warner Bros. Discovery.

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The lawmakers argue that Warner Bros Discovery's new ownership is "hollowing out an iconic American studio" by taking control. Warner Bros. Discovery canceled numerous projects shortly after the merger, including the film “Batgirl,” despite the fact that filming was already completed for The letter outlines many other projects canceled by Warner Bros. Discovery not long after the merger. Also in the letter, there is mention of the cancellation of popular shows like "Gordita Chronicles“, and "The Time Traveler's Wife“.

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Additionally, the lawmakers are also pointing out that Primetime Emmy Award winner J. J. Abrams is now searching elsewhere for a home for his TV show "Demimonde" which was picked up by HBO once but was canceled as soon as production began.

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It should be noted that Warner Bros. Discovery’s conduct amounts to a “catch and kill” practice that limits consumer choice, and that consumers will very likely not be able to watch shows purchased and then canceled by the company.

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Furthermore, the lawmakers make it clear that the company's actions are leaving workers with fewer and fewer options for employment and advancement, as a result of their actions.

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"Shortly after the merger was completed, WBD began realizing that the merger resulted in a number of cost synergies that were used to justify the merger in the first place - including the loss of hundreds of jobs for working people," the letter reads. "The first thing that WBD did was to shut down the streaming platform CNN+. It is estimated that about 350 employees were affected by the CNN+ cut, while CNN laid off an additional 400 employees four months later. Another cost-saving measure related to the merger was WBD's decision to lay off 100 people in its company's ad sales department as a part of its cost-cutting efforts. There were thousands of people who were affected by the cuts mentioned above in total. There are still $3.5 billion in planned cuts for WBD -- which does not bode well for the employees of the company."

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To conclude, the letter requests that the Department of Justice take another look at the transaction and consider the actions that the company has taken since the merger was finalized a year ago in order to make an informed decision. In their letter, the lawmakers express a hope that the merger guidelines will be updated in order to ensure they reflect the needs of workers, consumers, and content creators in the media and entertainment industry both today and in the future.

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There will be a press event sometime this week regarding Warner Bros. Discovery's new direct-to-consumer streaming service launching soon, according to the letter released this week.