Castro, Warren, Cicilline, Jayapal Lead Democrats Urging Justice Department to Investigate Proposed Merger of Discovery and WarnerMedia for Violations of Antitrust Laws
WASHINGTON – Today, Congressman Joaquin Castro (TX-20), Senator Elizabeth Warren (MA), Congressman David Cicilline (RI-01), Chair of the Antitrust Subcommittee, Congresswoman Pramila Jayapal (WA-07), Chair of the Congressional Progressive Caucus, and 29 other members of Congress sent a letter to U.S. Attorney General Merrick B. Garland and Assistant Attorney General Jonathan Kanter urging the Department of Justice to investigate the proposed $43 billion merger of Discovery and WarnerMedia for violations of antitrust laws. In addition, members of Congress are requesting the Justice Department examine whether the proposed merger will reduce diverse content in a more consolidated and less competitive market.
Congressman Castro views the lack of Latino representation across media platforms as a fundamental issue for all Americans. As Chair of the Congressional Hispanic Caucus (CHC), he worked with the House Committee on Oversight and Reform to request the Government Accountability Office (GAO) analyze Latino employment in the media industry as well as the enforcement of federal equal opportunity requirements. The GAO’s first report found that Latinos are woefully underrepresented in media, more than any other industry. Additionally, last year the House Judiciary Committee held a hearing at the request of the CHC that examined the lack of diversity of people of color in media. For example, a 2021 analysis by the Latino Donor Collaborative found that Latinos account for less than 3-percent of on-screen leads, showrunners and directors in shows.
“For far too long, Hollywood studios have excluded Latinos from opportunities in the industry, perpetuating dangerous stereotypes and inaccurate portrayals. Latinos are nearly 20-percent of the U.S. population, one-in-five Americans, but we’re almost invisible on-screen and behind the camera. I’m deeply concerned that the proposed merger between Discovery and WarnerMedia will lead to concentrated exclusion, harming consumers and workers — especially Latinos who are already the most underrepresented group,” Congressman Castro. “Giant corporations must not be allowed to stomp out competition, put up barriers to enter the market, and continue to exclude Latinos from the media industry. The Justice Department must thoroughly investigate that this deal does not illegally harm consumers and workers. Discovery and WarnerMedia need to demonstrate a real commitment to the widespread inclusion of Latinos and Latinas that is commensurate with their market participation.”
“The proposed merger between WarnerMedia and Discovery will not only lead to the enhanced market power of an already humongous company — it may also lead to less racial representation in the media and entertainment industry,” said Senator Warren. “We must stop harmful mergers, and the Department of Justice should thoroughly investigate this proposed merger to ensure diverse content and workers are protected.”
“It is critical that the Justice Department closely reviews this transaction to determine whether it harms competition, workers, and diversity in the media and entertainment industry,” said Congressman Cicilline. “There already has been rampant consolidation and we cannot allow another harmful merger to go unchecked.”
“As the Vice Chair of the House Antitrust Subcommittee, I know that corporate consolidation and monopolistic practices come at the direct expense of workers, consumers, competition, innovation, fairness, and equity,” said Congresswoman Jayapal. “As we learn more about Warner Media’s $43 billion merger with Discovery, it is clear that the Justice Department must scrutinize whether this transaction violates antitrust law while also examining whether this corporate merger will further reduce diverse content in an industry that far too often excludes the voices, perspectives, talents, and ideas of Black, brown, immigrant, and Indigenous people.”
The letter is also signed by: Grace F. Napolitano, Alexandria Ocasio-Cortez, Henry C. “Hank” Johnson, Jr., Juan Vargas, Al Green, Rashida Tlaib, Barbara Lee, Sheila Jackson Lee, Ben Ray Lujan, Veronica Escobar, Jan Schakowsky, Sylvia R. Garcia, Jamie Raskin, Jesús G. “Chuy” Garcia, Ted W. Lieu, Jamaal Bowman, Raul Ruiz, M.D., Teresa Leger Fernández, Michael F. Q. San Nicolas, Nydia M. Velázquez, James P. McGovern, Alan S. Lowenthal, Lloyd Doggett, Bonnie Watson Coleman, Betty McCollum, Mondaire Jones, Mark Pocan, Andy Levin and Zoe Lofgren.
“This transaction raises significant antitrust concerns,” the members wrote. “In particular, 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. In light of these concerns, we respectfully urge the Department to conduct a thorough review of this transaction to ensure that it does not harm American consumers and workers by illegally harming competition.”
“We also respectfully urge the Department to thoroughly examine whether the proposed combination of Discovery and WarnerMedia will reduce the amount of diverse and inclusive media and entertainment content available to consumers… A more consolidated, less competitive marketplace may only reduce the competitive pressure on media companies to provide consumers with more diverse and inclusive programming,” the members continued.
Full text is below and available here.
Dear Attorney General Garland and Assistant Attorney General Kanter,
We write to express serious concerns over WarnerMedia’s proposed $43 billion merger with Discovery. This transaction raises significant antitrust concerns. In particular, 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. In light of these concerns, we respectfully urge the Department to conduct a thorough review of this transaction to ensure that it does not harm American consumers and workers by illegally harming competition.
As you know, President Biden issued Executive Order 14036 to promote competition across the U.S. economy. As the Order notes, “excessive market concentration threatens basic economic liberties, democratic accountability, and the welfare of workers, farmers, small businesses, startups, and consumers.” Furthermore, it warned of mergers that eliminate competition between merging parties and increase a firm’s market power over workers, and urged the Justice Department to “enforce the antitrust laws fairly and vigorously” and “challenge transactions whose previous consummation was in violation of” the antitrust laws.
We appreciate the Justice Department’s efforts to underscore the importance of competitive labor markets in recent months. For example, Associate Attorney General Vanita Gupta explained in September that there has been a “realization that robust antitrust enforcement is critically important for advancing economic justice.” In October, Acting Assistant Attorney General Richard A. Powers of the Antitrust Division explained that “[c]ompetitive labor markets are essential to a properly functioning market-based economy,” and that the Antitrust Division “has become increasingly alert to and concerned by business conduct and transactions that harm competition for working people.” Most recently, the Department filed a lawsuit to enjoin Penguin Random House’s proposed acquisition of Simon & Schuster, explaining that it “will cause harm to American workers, in this case authors, through consolidation among buyers—a fact pattern referred to as ‘monopsony.’”
We wholeheartedly agree with the importance of protecting workers and pursuing economic justice through vigorous antitrust enforcement. Competitive markets create more high-quality jobs and give workers more freedom and flexibility to change jobs and negotiate for better pay and working conditions. Furthermore, in the absence of competition, the rise of employers’ market power reduces the power of workers to “voice and exit,” increasing their risk of exploitation. Enforcing the antitrust laws to stop mergers that enhance this type of monopsony power is critical to promoting free and fair labor markets and economic opportunity for workers. Enforcement of our anti-merger laws is especially critical for workers from marginalized communities. In the past, mergers across all industries have disproportionately led to job losses for workers identifying as racial and ethnic minorities compared to their white counterparts.
The media and entertainment industry already suffers from a lack of Hispanic representation in its workforce. In September, the Government Accountability Office reported that the media and entertainment industry had a lower rate of Hispanic workers than any other sector, and the data show that Hispanic workers fill a remarkably low number of professional, management, and executive roles in the industry. Last year, the House Judiciary Committee had a hearing that examined the lack of diversity of people of color in the media. Hearing witnesses underscored that “[t]he systematic exclusion of U.S. Latinx voices in film and media stifles creativity and imagination and fails to convey that our stories are American stories.” Additional consolidation is likely to eliminate competition for these workers and reduce the number of employment opportunities for Hispanic individuals looking to enter the industry. That is why it is so crucial for the Department to vigorously enforce the antitrust laws to combat monopsony power, leading companies to compete for the most talented, productive, inclusive, and diverse workforces. 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.
We also respectfully urge the Department to thoroughly examine whether the proposed combination of Discovery and WarnerMedia will reduce the amount of diverse and inclusive media and entertainment content available to consumers. The antitrust laws have long sought to promote greater innovation, consumer choice, and product variety. The Horizontal Merger Guidelines indicate that the antitrust agencies should consider whether a merger would “diminish innovation competition” or incentivize a firm to “withdraw a product that a significant number of customers strongly prefer.” These considerations are particularly vital in the media and entertainment industry. Consumers increasingly want diverse film and television content that reflects our diversifying nation. However, today’s media and entertainment marketplace is not providing consumers with the content they want, as people of color continue to be underrepresented in the cable, broadcast, and streaming video programming available to Americans. In 2020, Nielsen reported: “Across all TV, Hispanic’s share of screen is only one-third of their presence in population estimates. Even though Hispanics make up 18.8% of the population, they only account for 5.5% of share of screen across all of TV.” Despite representing nearly one-fifth of the population, Hispanics are systematically the most underrepresented on-screen compared to other demographics’ population share. A more consolidated, less competitive marketplace may only reduce the competitive pressure on media companies to provide consumers with more diverse and inclusive programming. For example, Discovery’s planned acquisition of WarnerMedia has already led it to eliminate up to $35 million it had planned to invest in programming.
Less diversity and inclusion on-screen and across the media industry leads to a perpetuation of harmful stereotypes. As it stands, minorities are largely missing from American media. And, when they are portrayed, it is often done using harmful stereotypes. For example, Latinos are most often portrayed as criminals, maids, or gardeners. Lack of representation coupled with dehumanization on screen leads to aggression towards Latinos in the United States and abroad. In fact, in August 2019, a man targeted and killed Hispanics in El Paso, Texas in part because he believed negative stereotypes about Hispanics that have been perpetuated in entertainment and American media.
Finally, recent consolidation in the media and entertainment marketplace has led to higher prices for consumers, and all too often the merging parties have failed to deliver benefits and broken promises made to the public, to Congress, and to antitrust enforcers.
In light of these serious concerns, we respectfully urge the Department to closely scrutinize the Discovery-WarnerMedia transaction and whether it violates the antitrust laws.
Thank you for your attention to this matter.
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