Ahead of the one-year anniversary of the Warner Bros. Discovery merger, four Democratic lawmakers have called on the Department of Justice to investigate the company.
A letter to Attorney General Merrick Garland and Assistant Attorney General Johanthan Kanter from Sen. Elizabeth Warren (D-Massachusetts), Rep. Joaquin Castro (D-Texas), Rep. David Cicilline (D-Rhode Island) and Rep. Pramila Jayapal (D-Washington) claims that the merger has appeared to have enabled the company to “adopt potentially anticompetitive practices that reduce consumer choice and harm workers in affected labor markets.”
Discovery closed its $43 billion merger of WarnerMedia in April 2022, which was ultimately not challenged by the DOJ after a review.
The letter cites several workforce reductions that have occurred at the company over the past several months as part of its restructuring, including layoffs of 350 people at CNN+, 400 additional people across CNN and 100 people in its ad sales department. It also claims that WBD’s new ownership is “hollowing out an iconic American studio,” citing cancellations of various projects including the $90 million “Batgirl,” Gordita Chronicles,” “Demimonde,” and “The Time Traveler’s Wife.”
“The damage to content creators whose projects are cancelled in deep development and post-production cannot be overstated,” the letter states. “Such cancellations stain these projects, making them less appealing and marketable to other buyers—consumers will likely never be able to watch shows purchased then cancelled by WBD. WBD’s conduct amounts to a de facto ‘catch and kill’ practice, vastly limiting consumer choice.”
During a media event in January, DC Studios co-chairman and CEO Peter Safran said touted the “incredibly talented people in front of and behind the camera” on “Batgirl,” but noted that it was “not releasable.”
“I think Zaslav and the team made a bold and courageous decision to cancel it, because it would have hurt DC and those people involved,” he added.
Additionally, the letter targets the company’s upcoming combination of HBO Max and Discovery+, which the lawmakers said “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.”
“With fewer alternatives available to consumers, there is less competitive pressure on WBD to innovate or provide a variety of quality content,” they added.
WBD is slated to hold a special event on April 12 to discuss the details of its new combined offering.
According to Bloomberg, the streamer will continue to charge $15-$16 per month for the ad-free version, as much as $20 a month for a new higher-priced tier which will offer better video quality and other high-end features and a cheaper, ad-supported tier for $10 a month. The streamer will also add thousands of unscripted reality titles from Discovery at no extra cost to HBO Max subscribers, while Discovery+ will continue as its own separate, lower-priced service.
The restructuring, which the company anticipates will be completed by the end of 2024, is expected to result in up to $5.3 billion in total pre-tax restructuring charges, including up to $3.5 billion in content impairment and development write-offs.
“We respectfully request that the Department take another look at the transaction, considering WBD’s
post-transaction conduct,” the letter concludes. “We also hope that the competitive consequences resulting from the WarnerMedia-Discovery merger inform updates to the merger guidelines to ensure that the guidelines reflect the needs of workers, consumers, and content creators in the media and
entertainment industry.”
The scrutiny surrounding Warner Bros. Discovery comes as Netflix and other streamers have been canceling various projects and as Disney has been undergoing its own reorganization, which includes cutting 7,000 jobs to help achieve $5.5 billion in cost savings.
A spokesperson for Warner Bros. Discovery declined to comment. Representatives for the Department of Justice did not immediately return TheWrap’s request for comment.
