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Democrats Push The Department Of Justice To Investigate Warner Bros. Discovery Merger

Democrats are asking the DOJ to investigate Warner Bros., Say Deal Is Responsible For 'Hollowing Out An Iconic American Studio'

Democrats are asking the Department of Justice (DOJ) to investigate Warner Bros. Discovery Inc over anti-competitive practices. 

Four Democrats have asked the DOJ to review the Warner Bros. Discovery merger, saying that the deal is responsible for “hollowing out an iconic American studio,” reports Los Angeles Times. 

In this photo illustration, the Warner Bros. Discovery logo is seen displayed on a mobile phone screen. Warner Bros. Discovery completed the merger at $43 billion with Discovery at $50 billion debt. IDREES ABBAS/BENZINGA

In a letter, Representatives Joaquin Castro, David Cicilline, and Pramila Jayapal, along with Senator Elizabeth Warren, wrote that the merger appeared to allow the company to adopt practices “that reduce consumer choice and harm workers.”

Saturday had marked the one-year anniversary of AT&T’s consolidation of Warner Bros. with Discovery at $43 billion. At the time, Discovery had more than $50 billion in debt.

Warner Bro. Discover had taken content and development write-offs of $2.8 to 3.5 billion reflecting an up charge of more than $1 billion.

As the company has benefited from the write-offs, in some cases, it could re-sell content else.

The Democratic politicians cited job cuts at CNN, including canceling CNN+ and many other projects.

The CNN had laid off 400 workers and terminating 100 employees in the ad-sales department related to the merger.

“The antitrust laws promote consumer choice, product variety, and industry innovation. Accordingly, if a consummated merger results in dramatically less available content and discourages innovation, the merger should be reassessed,” the Democrats wrote in a letter.

In a statement, Castro said the DOJ should look at the Warner Bros. Discovery merger as an example of why some deals should not be approved. The company’s executives had previously announced the decision to cancel the $90 million film “Batgirl,” claiming that it did not perform well with test audiences.

“For the sake of a tax write-off, because the company is carrying so much debt as a result of the merger, they canceled it,” Castro said of the decision. “If there had been no merger, that movie would have ended up going to theaters and on the streaming platforms.”

Last year, on April 8, Discovery, Inc. and AT&T Inc. announced that they had closed their transaction to combine the WarnerMedia business with Discovery. 

Lawmakers had pointed out that Emmy Award winner J.J. Abrams is now shopping for a home for his show “Demimonde” as the HBO picked up the project and canceled it before production began on the project. It raised the issue of the studio employees leaving the company with fewer choice of advancement in the company and employment.

Warner Bros. Discover is expected to hold a press conference in a later date regarding the new direct-to-consumer streaming plan. They currently have HBO Max and Discovery+ as their leading streaming platforms. Warner Bros is expected to produce 15 films this year and produced six in theaters in the past year.

Produced in association with Benzinga

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