'Mergers Are a Bad Deal for Everyone'

WASHINGTON — On Wednesday, Free Press Action Vice President of Policy and General Counsel Matt Wood testified about the harms of massive media mergers before a House Judiciary subcommittee. 

According to the hearing memo, the Subcommittee on the Administrative State, Regulatory Reform, and Antitrust convened the hearing to “examine competition among digital streaming services and how antitrust law relates to a consumer-facing industry undergoing changes through mergers and acquisitions.” The hearing is the first congressional inquiry into issues surrounding the possible acquisition of Warner Bros. Discovery by Netflix or Paramount Skydance.

Wood’s full written testimony is available here. What follows is his opening statement as delivered to the subcommittee: 

Regarding “Full Stream Ahead: Competition and Consumer Choice in Digital Streaming”

Chairmen Fitzgerald and Jordan, Ranking Members Nadler and Raskin, thank you for inviting me today.

This hearing is about competition and consumer choice in digital streaming. That means we must talk about a string of mega-mergers past and newly proposed.

Runaway consolidation eliminates choice. Companies routinely break promises and evade merger conditions. And under the Trump administration, these deals pose tremendous danger to free expression.

I must clarify something before I begin though, because of the companies involved in these merger talks, and confusion about our name. My organization, Free Press Action, is a public-interest group that works on media, tech, and telecom policy. For more than 20 years, we’ve been analyzing these markets, opposing harmful mergers, and fighting both government censorship and undue corporate control. 

We are not affiliated with The Free Press, the publication Paramount Skydance acquired last year before making its founder the editor-in-chief of CBS News. 

I don’t solely practice antitrust law, but since leaving corporate firms, I’ve spent much of my last 16 years opposing mergers that enrich executives, bankers, and lawyers at everyone else’s expense.

While Paramount is still pursuing Warner Bros. Discovery, the winning bid for now is Netflix’s $82.7 billion deal to buy a company that is somehow always up for sale, in deals that amounted to bad industry bets and huge debts. 

Netflix is the largest streaming service in the world, with more than 300 million subscribers. Warner Bros.’s “HBO Max” is well over 100 million, third-largest in the U.S. by most accounts. Paramount is likely the fifth largest streamer in the U.S. And that combo would couple two of the “Big 5” Hollywood studios, impacting the market for theatrical releases, movies, and TV.

Both potential mergers could severely harm the viewing public, creative industry workers, journalists, movie theaters that depend on studio content, and their surrounding main-street businesses, too.

We fear either deal would reduce competition in streaming and adjacent markets, with fewer choices for consumers and fewer opportunities for writers, actors, directors, and production technicians. Jobs will be lost. Stories will go untold.

We still need to crunch the numbers for an array of markets and metrics. We’ll listen critically to claims about supposed merger benefits. And we’ll ask whether there is sufficient competition to ensure that the billions saved in promised “synergies” are passed along, not pocketed. 

The job for antitrust enforcers is clear: They must engage in careful product market analysis to determine if these mergers violate the law, and whether they promise any real efficiencies, not just speculative assurances about alleged benefits to the public. 

Either Netflix or Paramount buying Warner Bros. could be “presumptively illegal” under DOJ’s merger guidelines. Members of this subcommittee and others in Congress have suggested so, on a bipartisan basis. Section 7 of the Clayton Act prohibits any merger that would “substantially lessen competition, or tend to create a monopoly” in “any line of commerce.” That is clearly a risk here.

In our view, either deal likely places far too much power, in too few hands, over what Americans watch and where they get their news. The numbers for that news component are dwarfed by the dollars thrown at the streaming side and studio catalogs. But in addition to HBO, Warner Bros. owns CNN and other cable channels. Netflix doesn’t want those; Paramount’s Ellison family desperately does.

We are all too familiar with claims that media giants “need” to merge to continue producing news. Their trickle-down notion is that more money for shareholders means more investment in news or content creation. 

But as history shows, companies merge to save money, not spend it. Every merger obliterates jobs. Post-merger companies will reduce output and raise prices whenever they can. And having fewer voices makes censorship easier, with fewer corporate gatekeepers to lean on.

Even more dangerous than the notion that mergers can “save” the news is the way this President has weaponized the merger review process. In conjunction with other threats made in plain sight, his agencies have used deal approvals to win favors. The FCC has blessed mergers moments after deal proponents promised to follow the President’s demands to end diversity policies. They’ve capitulated on chilling requests to reshape their newsrooms.

The merger that spawned Paramount Skydance was greased by an FCC investigation and a multimillion-dollar settlement of a specious lawsuit over editing choices in an interview with then-Vice President Harris. Paramount installed a former Trump ambassador as a “bias monitor,” and recently spiked a 60 Minutes investigation into Trump administration wrongdoing.

Now, Paramount Skydance’s CEO promises “sweeping changes” to CNN if he takes it over. Tilting a merger review process to facilitate this should be unthinkable under the First Amendment.

Should a President use merger reviews to gain political outcomes he wants? Some may think it depends on which party holds the White House. But that answer abdicates the antitrust oversight this subcommittee conducts, and the antitrust laws enforcers must apply.

Thank you, and I look forward to your questions.