House

Lawmakers call for investigation into proposed AT&T WarnerMedia, Discovery merger

More than 30 Democratic lawmakers are calling for an investigation into the proposed merger between AT&T's WarnerMedia division with Discovery Inc., pointing to a number of "significant antitrust concerns" with the $43 billion plan.

The group penned a letter to Attorney General Merrick Garland and Assistant Attorney General Jonathan Kanter on Saturday, urging the Department of Justice (DOJ) to "closely scrutinize" the proposed transaction to discern if it violates any antitrust laws.

AT&T announced in May that it was merging its WarnerMedia division with Discovery Inc. to create a publicly traded company, dubbed "Warner Bros. Discovery," that is centered on entertainment.

The new company would control all of WarnerMedia's products, including CNN, Warner Bros., HBO, HBO Max, Turner Sports, TNT, TBS, TCM, Cartoon Network and other media brands, in addition to Discovery Inc.'s Food Network, HGTV, the Science Channel, Animal Planet and others.

The transaction is currently pending approval and is believed to be completed in the middle of 2022, according to a September report from Reuters.

The lawmakers, led by Sen. Elizabeth Warren (D-Mass) and Reps. Joaquin Castro (D-Texas), David Cicilline (D-R.I.) and Pramila Jayapal (D-Wash.), said the proposed merger between WarnerMedia and Discovery Inc. "threatens to enhance the market power of the combined firm and substantially lessen competition in the media and entertainment industry," which would, in turn, cause harm to consumers and American workers.

Specifically, the group said that employers' increased market power could cause the exploitation of workers to spike.

"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," the lawmakers wrote.

They also argued that the proposed transaction could threaten diversity in the entertainment industry, specifically pointing to the Hispanic community.

They wrote that the merger of the two entities "is likely to eliminate competition for these [Hispanic] workers and reduce the number of employment opportunities for Hispanic individuals looking to enter the industry."

The letter cited the Government Accountability Office to illustrate that Hispanic involvement in the entertainment industry is already low.

"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," the Democrats wrote.

They also pointed to the potential for the transaction to reduce the amount of diverse and inclusive media and entertainment content accessible to consumers, asking that the DOJ look into such a situation.

"A more consolidated, less competitive marketplace may only reduce the competitive pressure on media companies to provide consumers with more diverse and inclusive programming," they wrote.

Additionally, the lawmakers said recent mergers in the media and entertainment industries have "led to higher prices for consumers," adding "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."

AT&T CEO John Stankey responded to antitrust concerns with the merger on Monday, telling analysts that the issues raised in the letter are "unfounded," according to The Dallas Morning News.

"Not to say that we won't get into dialogue and have a constructive conversation for people to understand, but I think what's been articulated in those letters is really unfounded," Stankey said at the UBS Global TMT Virtual Conference, according to the Dallas Morning News.

"I've seen nothing that's gone on in the process at this point in time that's out of pattern or out of skew and it's going as expected. We continue to have really good and constructive discussions with folks as a result of that," he added.

He said he believes the "context of our discussion with regulators up to this point have centered around those issues, and we feel very good about the data we put on the table," adding "it's clearly indicated that there's nothing unusual about this transaction."

The Hill reached out to AT&T for comment.

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