On Wednesday, the House Judiciary Committee’s Subcommittee on Antitrust held a hearing on potential consolidation of the video streaming market. Republican committee members, particularly committee leadership, advocated for sensible antitrust enforcement by championing the consumer harm standard that has served us well for decades.
Warner Bros.-Discovery, the media conglomerate that has been through a number of mergers in recent years, has accepted an $83 billion bid by Netflix to acquire most of its assets. The board rejected a competing bid from Paramount Skydance, but the latter company could try again if the Netflix deal falls through. Before either deal becomes official, the Federal Trade Commission and/or Department of Justice could intervene to try and stop the merger.
Democrats are already objecting, absurdly arguing that the streaming service market would not have enough competitors if two of them merged. It is difficult to think of a market as oversaturated as streaming services – Netflix pioneered the business model that every major media company has sought to emulate, and it remains the only consistently profitable of the platforms.
Meanwhile, consumers complain that there are too many streaming services and hit shows are not accessible. This market is rife for consolidation, which began with Disney’s acquisition of Hulu several years ago. Consumers would be helped, not harmed by a merger that reduces the number of subscriptions one must pay for to find one’s favorite shows.
That said, focusing on streaming marketshare is misleading in the first place since Netflix is not a peer studio to Warner Bros. Netflix may out-compete HBO Max in subscriptions, but that is just one piece of Warner Bros.-Discovery’s media empire. It is Netflix’s entire business.
Netflix does not have the intellectual property catalogue going back to the 1930s, the studio infrastructure, or the cable assets of a legacy studio like Warner Bros. They do not even have an iconic corporate mascot like Bugs Bunny. Netflix is a disruptor that harnessed new technology to make the market more competitive, and is now moving to join the big leagues by acquiring one of the legacy players. This is how competition is supposed to work.
This view was championed by subcommittee Chairman Scott Fitzgerald (R-Wis.) and Chairman Jim Jordan (R-Ohio) of the full committee. It was also echoed by witness Jessica Melugin of the Competitive Enterprise Institute.
“Antitrust cannot serve two masters,” she told Chairman Jordan in response to his question about what happens when government enforcers depart from the consumer harm standard. If the government doesn’t focus on consumer interests, it will fall to some other pecuniary interest.
That companies often have to seek permission from the government to merge is an albatross around the net of economic dynamism and a conduit for abuse and corruption. Democrats are objecting to a potential Paramount acquisition (even though Warner’s board has already rejected it) because they do not like the politics of owner David Ellison.
Subcommittee Ranking Member Jerry Nadler (D-N.Y.) said as much during his opening statement. Making frequent reference to Bari Weiss, the new editor-in-chief of CBS News who was chosen by Ellison to help correct for some of the left-wing bias at the network, Nadler alleged that the Trump administration was installing “minders” in “pravda-like” fashion in newsrooms.
Putting aside that Weiss is a well-known moderate hired to reverse declining trust in media, Nadler is the one who wants to weaponize antitrust for political purposes. He is preemptively drawing a line in the sand on a potential Paramount purchase because he doesn’t like how CBS News is covering politics.
How about instead of politicians using the power of the state to decide who gets to own their favorite news channel that gives them favorable coverage, we let the shareholders decide?
Judiciary Committee Ranking Member Jamie Raskin (D-Md.) made a forceful opening statement about the FCC weaponizing mergers to achieve outcomes the Trump administration prefers.
Americans for Tax Reform agrees with Raskin’s sentiment: neither the executive nor the legislative branch should veto deals between private actors for political purposes, especially when the market is so competitive.
The bottom line with this merger is that the shareholders should be allowed to sell to whomever they want, and politics – whether it’s the DOJ pushing for a certain editorial line or Congressional Democrats trying to punish David Ellison – should stay out.
As the subcommittee chairman Rep. Fitzgerald said in his closing statement, “We should let people decide what’s best for them.”
