▶ 0:22:26Subcommittee will come to order. Without objection, the chair is authorized to declare recess at any time. We welcome everyone to today's hearing on competition and consumer choice in digital streaming. I will recognize myself for an opening statement before I just I I know the witnesses are aware and I think the members are. We have a um briefing on Venezuela at 11:30.
▶ 0:22:50So, we're going to kind of see how things flow and how we move here today and depending on that, I I know there's some members that absolutely want to attend that. So, we'll just keep that in mind as we move through this. So. For much of the 20th century, film distribution was dominated by theatrical release. The golden age of Hollywood saw the rise of movie stars and blockbuster hits that drew millions to the box office.
▶ 0:23:14The creation of the television in the 1950s introduced a new and innovative way to consume media. Uh what was initially seen as a threat to the film industry instead became one of its greatest synergies. Studios began licensing films for TV broadcast and the advent of the VHS tape and DVD D player opened up an additional revenue stream for direct consumer video sales.
▶ 0:23:40The emergence of digital technology and broadband internet fundamentally disrupted this model and with it the dominant players. In the year 2000, only 1% of households had broadband internet capability uh and that capability of delivering high-quality videos online. By 2023, that number reached 80% of US Streaming platforms eliminated the need for theatrical releases and physical distribution, which we know was uh troubling to the industry.
▶ 0:24:09Instead of relying on theater chains or video sales, content could be delivered directly to consumers on demand. This shift lowered batter barriers to entry and enabled new competitors to challenge traditional studios on a global scale. The result, as we're seeing today, is studios that did not exist in Hollywood's golden age acquiring the ones that did.
▶ 0:24:34The injection of has also forced uh legacy studios to adapt to that. Uh Netflix's introduction of the first streaming-only model in 2010 forced Paramount, Disney, Warner Brothers, and others to develop their own platforms.
▶ 0:24:5015 years later, nearly all major film and TV studios have their own streaming Today, digital streaming is a primary method for consumers uh to use and to develop access to TV and other media According to a 2025 Nielsen report, streaming represented nearly 47% of total TV usage and, for the first time ever, outpaced the combined share of broadcast and cable.
▶ 0:25:19But as more content becomes uh across multiple streaming services, uh consumers are growing frustrated. A separate Nielsen survey found that 46% of streaming viewers are finding it difficult to find the content they want to watch because of too many services. A survey by The Motley Fool found that uh the number is even higher with 62% of surveyed believing there are too many options.
▶ 0:25:48This is particularly acute in sports broadcasting. Fans who want to watch their favorite sports teams are now having to subscribe to multiple streaming platforms to access each game. This frustration is driven in large part by increased prices. Uh according to The Wall Street Journal, uh since 2019, prices for the top streaming services has risen an average of 87%.
▶ 0:26:15Disney Plus, Apple TV, NBC Peacock have all seen price increases of more than 100% since their creation. Households who subscribe to an average of four streaming platforms are quickly seeing their monthly streaming bills equal or surpass their monthly cable As consumer demand for streaming continues to rise, platforms must compete for viewers by offering high-quality content.
▶ 0:26:41Netflix, Apple, and Amazon, for example, have made significant investments in movie studios to deliver blockbuster-level movies and award-winning TV straight to consumers. And it appears to be working. Netflix has 18 Oscar nominations in 2025 and Apple TV Pluribus just became the most-watched show in the streaming studio's history. But that content does not come without a To make a blockbuster film will now cost a studio more than $200 million.
▶ 0:27:11A high-end TV show can easily exceed $10 million per episode. Pluribus cost Apple TV a reported $15 million an episode. As a result, many of these companies operate with negative profit margins for several years before achieving Netflix is the only platform to maintain consistent profitability since 2022. In other words, the barrier to sustain a competitive streaming service is high.
▶ 0:27:40Uh it's no surprise then that many of these companies are choosing to buy rather than build their own content. Disney, for example, acquiring 20th Century Fox in 2019. Amazon acquired MGM Studios in 2022. Most recently, Netflix announced an agreement to acquire Warner Brothers Studio.
▶ 0:28:01This deal, one of the largest of 2025, would combine two of the top four streaming services by global subscriber As expected, the reactions to this merger have been mixed. And let me be clear. This hearing is not about picking winners or losers in the merger context.
▶ 0:28:22This is for Warner Brothers Today, we're here to start a much-needed conversation about whether further consolidation in the streaming industry would be helpful or harmful to Economic theory teaches us that mergers create efficiencies and that's no different when it comes to the streaming By vertically integrating content production and distribution, platforms can eliminate and also work on lowering
▶ 0:28:53redundancies and focus on delivering high-quality content to consumers at lower prices. Some will argue that eliminating a rival will hurt competition or further entrench a dominant player. Others may say it will harm or already distressed theatrical film industry. We should take all of those concerns very seriously.
▶ 0:29:13But I would remind colleagues that the antitrust law is meant to protect consumers by promoting competition and any potential harm should always be weighed against consumer benefit. And a merger that results in greater choice in video libraries at lower prices is welcome while delivering to consumers a solution to their current frustration with the fractionalized streaming content.
▶ 0:29:37Uh and it does not strike me certainly thinking many of the other members as a merger uh we should initially be concerned with a look at the entire entity of what's being promised. I want to thank our witnesses for being here with us today, and I look forward to your testimony. I now will recognize the ranking member, Mr. Nadler, for his opening statement. Thank you, Mr. Chairman.
▶ 0:30:08Mr. Chairman, the entertainment and media landscape has been transformed in recent years. Many of these changes have brought undeniable benefits, such as streaming services that give viewers more options at their fingertips than ever before. But, many of these changes have also come at a cost, as lax antitrust enforcement and waves of consolidation have concentrated power in just a few major players. And one thing has seemed to be constant over the last few decades, a merger involving Warner Brothers.
▶ 0:30:38It began with the disastrous AOL Time Warner merger in 2000, then the short-lived partnership with AT&T in 2019, then it's latest incarnation since 2021 as Warner Brothers Discovery. And now, once again, Warner Brothers is up for sale to another media giant.
▶ 0:30:57This time, it has accepted a bid from Netflix, the global leader in streaming services and a major content producer in its own right, to control Warner's streaming and studio assets, including such mammoth properties as DC Studios, HBO and HBO Max, and Warner Brothers motion picture and television groups, as well as Warner's 128 million streaming subscribers.
▶ 0:31:23What we know today about this proposal raises a host of questions about its effect on the pricing, production, and distribution of content going forward. We have also heard with greater We have also heard great alarm from the movie theater industry, which despite claims from Netflix that it will keep theatrical businesses operating largely as they are, takes seriously comments from its co-CEO, who called movie theaters, quote, an outmoded idea, and quote, not Further, labor
▶ 0:31:53labor groups like the Writers Guild of America and the Directors Guild have have raised concerns and say that this proposed merger is not in their interest or the Serious concerns have been raised about whether this deal, which by some measures would give the merged company over 30% of the streaming market, could reduce competition, diminish consumer choice, raise subscription prices, threaten jobs, wages, and working conditions in the creative industries, and reduce diversity of content and
▶ 0:32:23Netflix argues that this merger would allow it to better compete with the range of other platforms that are battling for eyeballs and attention from viewers, including other streaming giants like YouTube, traditional movies and television, social media, and more. But, if Netflix must get bigger in order to compete, that is a sign of a market that is already highly out of balance.
▶ 0:32:46Under the Netflix deal, Warner's cable channels, including most notably CNN, would be spun off into a separate business that would not be part of the But, another major media conglomerate, Paramount Skydance, has now made a hostile bid to control all of Warner Warner's properties, including CNN. Even though the Warner Brothers board has rejected the Paramount bid for now, Paramount could still pursue a buyout of Warner Brothers.
▶ 0:33:13A potential merger with Paramount presents its own set of antitrust concerns. By collapsing what are now five major movie studios down to four, thereby reducing competition and substantially increasing concentration within an already concentrated industry. Not only could this bring higher prices and less choice for consumers, but it could also bring fewer jobs and lower wages for content creators.
▶ 0:33:38The Paramount bid also brings its own unique set of circumstances of concerns, because it would place CNN under the control of the Ellison family. The same billionaires who have curried favor with Donald Trump by imposing control over the content of CBS News.
▶ 0:33:54Just weeks ago, Barry Weiss, the controversial minder placed in charge of CBS News, spiked the story on 60 Minutes that would have shed shed light on the Trump administration's lawless campaign to send migrants to be tortured in an El Salvadoran prison. Excuse me.
▶ 0:34:12Presumably, the Ellisons have similar designs on making CNN more A merger with either Netflix or Paramount would result in a behemoth that poses significant antitrust and other public policy concerns that require careful scrutiny. I have long believed that the unchecked concentration of economic power in any industry poses a danger to economic fairness and to our democracy.
▶ 0:34:38While I do not prejudge the merits of any proposed merger, I am concerned with any deal that would significantly increase the concentration in a market that is already highly concentrated. Such increased concentration could not only harm consumers, but we have also heard great concern from the creative guilds, who have borne the brunt of decades of media consolidation that historically has been followed by fewer jobs, downward pressure on wages, and reduced creative opportunities.
▶ 0:35:05That is why it is so important that any merger be reviewed with careful and impartial analysis by the antitrust under the Trump administration, the antitrust review process has been dangerously corrupted and politicized. Just last month, we heard from a former senior Trump administration antitrust official who testified that under this administration, the rule of law is being replaced by the rule of lobbyists and corporate interests.
▶ 0:35:33We know that the White House routinely intervenes in Justice Department matters, often to benefit the president and his cronies. And already, Trump himself has said, quote, I'll be involved in that decision, unquote, when asked about the Warner Brothers deal. Does he intend to put his thumb on the scale in favor of Paramount as a reward for his friends, the Ellisons, who according to press reports have already promised to implement, quote, sweeping changes over CNN if they were to take That This is not a far-fetched scenario.
▶ 0:36:03There were troubling reports that Trump tried to block the AT&T Time Warner merger as retaliation for CNN's critical coverage of him during his first administration and campaign. Mr. Chairman, we have seen this movie and the sequel is almost always worse.
▶ 0:36:20A hallmark of the second Trump administration has been a determined effort to to exercise control over the independent news media, whether through frivolous lawsuits against media outlets, limiting press access to the White House and the Pentagon, and gutting funding for public radio and PBS. The White House must not be allowed to use the merger review process as another tool in its campaign to bend the media to its will.
▶ 0:36:46A proposed merger, whether be with Netflix, Paramount, or some other suitor, must be analyzed on its own merits. What we know already about the antitrust review process under this administration calls for serious congressional oversight. But, unfortunately, our Republican colleagues have turned a blind eye to their oversight responsibilities during this Congress, and today is just one more missed opportunity. It is vitally important that we examine the Warner Brothers merger closely to ensure that any deal will protect competition, consumers, and workers.
▶ 0:37:16And I appreciate our witnesses being here today to lend their expertise. I look forward to today's hearing, and I yield Gentleman yields back. I now recognize the ranking member of the full committee, Mr. Raskin, for his opening statement. Mr. Chairman, thank you very much, and thank you to your all the witnesses for joining us today.
▶ 0:37:35Against the background of a media industry that is already heavily under the control of several multi-billion dollar media companies, we're gathered to discuss the proposed acquisition of Warner Brothers Discovery by Netflix, two giant rivals in the field of entertainment. The alternative acquirer, Paramount Skydance, is itself not only a giant rival in entertainment, but also a rival in news.
▶ 0:37:59In ordinary times, we'd proceed carefully with an acquisition of this size to ensure that it passes scrutiny under American antitrust laws. But, these are not ordinary times. Just last month, this subcommittee heard testimony from whistleblower Roger Alford, who served in antitrust at the DOJ during both the first and second Trump terms. During Trump's first term, Alford served as deputy assistant AG, and during the second as the principal deputy assistant AG, which is second in command.
▶ 0:38:28He testified to the pervasive practice of lobbyists attempting to corruptly influence antitrust law enforcement at the Department of Justice, telling us the corporate lobbyists now boast about their ability to overrule both the professional antitrust experts and President Trump's own handpicked leadership at the antitrust division. And just to be clear, Professor Alford is a strong supporter of President Trump. He served in both the first and second terms.
▶ 0:38:58He sees clearly that this political and financial corruption of antitrust law betrays Donald Trump's avowed populist agenda as he sees it, the one of lower prices, affordability, and increased choice and competition that the president once long ago promised the American people on the campaign trail. Well, we already know well how this corruption works in Trump's Washington. Professor Alford gave a detailed description of what he called the HPE Juniper merger scandal.
▶ 0:39:29He told us that on numerous occasions and a variety of matters, we implored our superiors and lawyers on the other side to call off the jackals, but to no avail. Today, cases are being resolved based on political connections, not on the legal merits. These warnings from a top Trump appointee command our urgent attention. Yet, my Republican colleagues refuse to conduct any kind of serious oversight of what's going on in the administration.
▶ 0:39:55In 12 months, our colleagues have had just one administration official come in up here before the committee, FBI Director Kash Patel. Committee Democrats have invited two Trump officials as minority witnesses. And as you know, we only get to invite one witness, but we've had two of them, Mr. Alford and FTC Commissioner Alvaro Bedoya. The chairman has had only one.
▶ 0:40:17We urgently need the Attorney General Pam Bondi to appear before Judiciary so we can conduct oversight over an increasingly out of control, lawless, and corrupt Department of Justice both in the antitrust domain and in many others. And it's not just DOJ. The whole government is now saturated in pay-to-play corruption and lawlessness. Take the example of Skydance's acquisition of Paramount last year.
▶ 0:40:44In late 2024, [snorts] incoming FCC Commissioner Brendan Carr accepted two tickets worth $12,000 to go to the Kennedy Center Gala. The donor was Paramount, whose proposed merger with Skydance was about to require Commissioner Carr's approval. Now, I concede that $12,000 these days is petty cash compared to the billions of dollars that are being raked in by the president routinely and the corruption flowing throughout the administration.
▶ 0:41:12But pre-Trump, a $12,000 gift to an FCC Commissioner that you're about to appear appear before would have been a scandal. Well, at the gala, Commissioner Carr reportedly pulled his hosts aside and gave them advice. Paramount owns CBS. President Trump had sued CBS for $10 billion in damages because he didn't like the way that they they edited an interview with Vice President Kamala Harris.
▶ 0:41:42Well, that of course is an entirely frivolous legal claim. I don't like the way that Fox News edits the interviews with Donald Trump, but that doesn't constitute defamation against me. That's just stupid. But Commissioner Carr reportedly told the Paramount executives that Trump's grudge against CBS News was so serious that it would make review of the merger, quote, "Tougher than anticipated." And they might need to make some concessions directly to the president to convince him to approve
▶ 0:42:13the deal. Once in office, Carr sat on the merger for months. Why? So Trump could extract extraordinary benefits from the companies in exchange for approval of the deal. And look what he got, a $16 million contribution to his presidential library, millions dollar more committed in free advertising, a promise to install a monitor minder in the CBS newsroom, and the cancellation of The Late Show with
▶ 0:42:43Stephen Colbert. Only then did Carr permit the merger to Ladies and gentlemen, this is not antitrust law. This is a political and financial shakedown substituting for an antitrust merger review. It's got nothing to do with antitrust law or consumer choice or lower prices. It is corruption. It's exactly what Professor Alford was warning us about.
▶ 0:43:08And one key result of this corruption is a newsroom that refuses to broadcast news that the administration disfavors. Few days after Alford testified, CBS's 60 Minutes was scheduled to air a special on Secot, the notorious torture prison in El Salvador, introduced to inmates there as hell on earth, that the Trump administration has used as a dumping ground for immigrants, many of them lawful asylum seekers.
▶ 0:43:38Right before the story was set to air, it was indefinitely postponed. Why? What happened? Well, we don't have to wonder. Bari Weiss, the new editor-in-chief at CBS and the new government-imposed prob the like media monitor and minder, said she would not let the broadcast go forward without uh, getting comment from a government spokesperson on the air.
▶ 0:44:03But the Trump administration had refused to allow any of them to comment on the air. Here's Sharyn Alfonsi, the 60 Minutes correspondent, who said, "Our story was screened five times and cleared by both CBS attorneys and standards and practices. It was factually correct. In my view, pulling it now after every rigorous internal check has been met is not an editorial decision. It's a political one. We requested responses to questions in our interviews with DHS, the White House, and the State Department.
▶ 0:44:33Government silence is a statement. It's not a veto. Their refusal to be interviewed is a tactical maneuver designed to kill the story. If the administration's refusal to participate becomes a valid reason to spike a story, we've effectively handed the government a kill switch for any reporting they find inconvenient.
▶ 0:44:53I hope that this kind of consolidated corporate government censorship troubles all of our colleagues, Democrats and Republicans who still have a First Amendment bone in their body. This kind of censorship regime aligns us with the state of press freedom in Putin's Russia or Mohammed bin Salman's Saudi Arabia. The economic effects of these side deals must trouble us, too. Each new merger acts [snorts] as a new opportunity for the president to enrich himself and his family and friends.
▶ 0:45:23The cost of businesses involved in these deals now even as a term in the economic literature, the Trump transaction tax. Every party to this kind of transaction now bears the risk of a political shakedown for money confessions that are not connected to proper antitrust It's about what enriches and satisfies [snorts] the president.
▶ 0:45:48Hundreds of economic studies in gangster states show that [clears throat] these kinds of corrupt practices reduce investment, distort markets, increase costs, and lead to lower employment. So, here we are again. When Warner Brothers announced that it would put itself up for sale, President Trump promised that, "I'll be involved in that decision." Although no law gives him a role in it. He Mr. Chairman, I must object.
▶ 0:46:12I I fully believe that opening statements can be as long as for the ranking members can be as long as necessary if they stay on topic. This is clearly a bashing of the president and beyond the pale of this committee.
▶ 0:46:24I'm not going to accept any subject matter or content regulation by the gentleman from California. I'm about to finish. So, let's not belabor a ridiculous point. We've never interrupted an opening statement of anybody on your side of the aisle. What a ridiculous thing to do.
▶ 0:46:39I would just remind the ranking member that we're up against an 11:30 kind of hard stop. I appreciate that. And I'll be done in a minute, okay? Um, the president seems to want Paramount and Netflix to compete for his approval of a deal. Both companies are already lobbying the White House right And to state the obvious, President Trump is not an antitrust expert, nor is he committed to antitrust He's long been critical of CNN, which is owned by Warner Brothers.
▶ 0:47:09For years, he's told us that he hates their reporting, he hates their reporters, and he wants to sue the network. Does anyone doubt that one way to entice the president's favor is to promise him more direct control over CNN? Mr. Chairman, we should be calling in the government officials who have participated in or acquiesced in these side deals.
▶ 0:47:29To date, I am sorry to say, the closest we've gotten to hearing from a real administration witness is Professor Alford, who we invited here at the minority's invitation when he could have been your witness months ago. This proposed merger poses significant antitrust questions. I'm eager to discuss them, but this committee must also do the work of ensuring that the antitrust laws are actually being enforced and not being replaced by a system of corruption. Thank you, Mr. Chairman. I yield back. Ranking member yields back. Without objection, all other opening statements will be included in the record.
▶ 0:48:00We will now introduce today's witnesses. Mr. Jay Ezralev is the founding [snorts] and managing principal of Eleve Con, a consulting firm. He also serves as an adjunct professor at George Mason Antonin Scalia Law School. He previously served as an economic advisor to the FTC Chairman Joseph Simons. Uh, Ms. Jessica Melugin. Ms. Melugin is the director of the Center for Technology and Innovation at the Competitive Enterprise Institute.
▶ 0:48:31Her research focuses on antitrust, online privacy, artificial intelligence, social media, and net neutrality Dr. John Yoo. Dr. Yoo is a professor of law at the George Mason University Antonin Scalia Law School. His research focuses on antitrust and intellectual property, data and privacy.
▶ 0:48:56He previously served as the acting deputy assistant director of the Bureau of Economics at the Federal Trade Mr. Matt Wood. Mr. Wood is the vice president of policy and general counsel at Free Press, a nonprofit organization that advocates on issues relating to media and technology. Mr. Wood leads the organization's policy and legal efforts. We welcome our witnesses and thank them for appearing today. We will begin by swearing you in.
▶ 0:49:25Would you please rise and raise your right Do you swear or affirm under penalty of perjury that the testimony you are about to give is true and correct to the best of your knowledge, information, and belief, so help you God. Let the record reflect that the witnesses have answered in the affirmative.
▶ 0:49:47Thank you, and you can be Please note that your written testimony will be entered into the record in its entirety. Accordingly, we ask you to summarize your testimony in 5 minutes. Dr. Ezralev, you may begin. Mr. Chairman, members of the committee, thank you for the opportunity to testify on competition and consumer choice in digital streaming.
▶ 0:50:17I'm Jay Ezriel, a founder of the economic consulting firm Alavacon. I'm also an adjunct professor at Antonin Scalia Law School at George Mason University. From 2018 to 2020, I worked at the FTC as the economic advisor to Chairman Joseph Simons. Digital streaming has revolutionized how we consume video content. It has driven innovation in both content creation and distribution, which benefits consumers.
▶ 0:50:47It is now the most popular way we consume video content. We now have two potential blockbuster merger deals in digital streaming with both Netflix and Paramount seeking to acquire Warner Brothers. These deals have the potential to reshape the competitive landscape in digital There is an understandable concern about these deals, what what these deals will mean for streaming and content creation.
▶ 0:51:13Will we continue to have innovation and new compelling content delivered via digital streaming? The two potential deals will face merger review, most likely by DOJ. Will this review make sure that we continue to have the benefits of digital streaming competition? The two deals come at a pivotal time for anti-trust.
▶ 0:51:37Anti-trust enforcement agencies have been shifting the focus of enforcement from the core focus of uh harm to competition to pursuing broader policy goals. This shift began under the Biden administration with the anti-trust enforcement agencies pursuing a broader policy agenda, such as combating unfair treatment of workers, and seeking to diminish corporate power. This is a troubling development for anti-trust.
▶ 0:52:06Deviating from the core anti-trust principles will diminish anti-trust as a tool for preventing harm to competition. Expanding anti-trust beyond this core principle replaces efficient market function with enforcers' views of what is fair and It chills entrepreneurship by supplanting an entrepreneur's judgment about the best way to allocate capital.
▶ 0:52:32It is this entrepreneurship that has brought us enormous innovation and While it's still early days, anti-trust enforcement agencies under the current administration are continuing to apply a broad scope of anti-trust um in enforcement. Even more troubling, states are increasingly pursuing their own anti-trust agendas beyond preventing harm to competition.
▶ 0:52:59In reviewing the potential Netflix and Paramount deals, anti-trust enforcement should focus on the core anti-trust goal of preventing harm to competition. The enforcers should not be picking which of the two deals should go through based on what they think will deliver the best outcome for consumers.
▶ 0:53:18This choice is for Warner Brothers Discover The enforcers should also not use their leverage to extract a settlement that advances a policy agenda. The focus should be strictly on preventing harm to I don't know if there's a compelling anti-trust case against either of the deals.
▶ 0:53:40However, however, I would be highly skeptical of an enforcement case based entirely on a structural presumption, or a presumption over substantial lessening of competition based on an increase in market concentration in the relevant market. Such an increase in market concentration should be a starting point for determining whether to move further in the investigation.
▶ 0:54:04An increase in market concentration by is not by itself a reliable indicator of harm to Most importantly, let's keep anti-trust focused on preventing harm to competition and not on advancing a political agenda. Thank you, doctor. Doctor yields back. Ms. Malujan, you may now begin.
▶ 0:54:30Chairman Fitzgerald, ranking member Natalie, and distinguished members of the of committee. Thank you for inviting me to testify. My name is Jessica Malujan, and my work focuses on technology and anti-trust at the Competitive Enterprise Institute, a non-partisan public policy organization. I am also an anti-trust and competition fellow at the Innovators Network It's sometimes said that history does not repeat itself, but it often rhymes.
▶ 0:54:57Certainly, there is a familiar tone in today's conversation around the merits of anti-trust intervention in digital streaming markets to what we've heard before in past calls to intervene in entertainment mergers. In 2005, after what The Wall Street Journal then described as {quote} the not-so-gentle prodding of federal anti-trust the movie rental chain Blockbuster dropped its bid to purchase rental chain rival Hollywood Entertainment.
▶ 0:55:24Defenders of the merger pointed to the emerging competitive threat of a then up-and-comer who had signed up 3 million subscribers to rent DVDs through the That disruptor was, of course, Netflix. So, while regulators fretted about the combined market power of two brick-and-mortar DVD rental chains, the market was busy shifting the paradigm. An increasingly widespread internet soon disrupted traditional models of distribution once again.
▶ 0:55:52Netflix was adept enough to navigate that transition from the post office to telecom, and the company now finds itself more directly involved in the conversation around preserving competition in the entertainment While the details of these separate cases have changed, the lessons of regulatory restraint remain the same. Just as the Federal Trade Commission could not have anticipated the technological shifts that rendered physical DVD rentals nearly obsolete, anti-trust regulators today still cannot predict what might come next.
▶ 0:56:22They can, however, observe current market dynamism to better understand how allocating economies of scale and vertical allowing economies of scale and vertical integration could benefit consumers. As digital streaming companies and adjacent market participants adjust to a landscape where consumers' time and attention are now the most important remaining scarcities, regulators will likely evaluate their attempts to merge, adapt, and compete.
▶ 0:56:49This process should follow well-established methodologies using economic evidence to determine the relevant market and possible anti-competitive effects, while equally assessing the potential pro-consumer Determining the proper relevant market will be the first step of any anti-trust litigation, but it won't be an easy task Government efforts to block mergers will likely attempt to establish the narrowest possible definition of the relevant market, namely subscription video on demand exclusively.
▶ 0:57:18But, does that provide an accurate reflection of how consumers view possible substitutions? Do broadcast, cable, and satellite channels still provide ample competitive pressure to restrain prices, encourage output, or maintain quality for merged streaming And looking forward rather than backward, does YouTube TV, or even the standard YouTube or TikTok platform, sufficiently compete with streaming for consumer attention?
▶ 0:57:44Social media's vast and free to the company content may well constitute a sufficient competitive threat to streaming services that justifies their need to bolster their holdings of more evergreen rewatchable content libraries and the production capabilities of traditional studios.
▶ 0:58:01Perhaps concerns about preserving competition are less about horizontal issues between merging streaming services, and more about the ability of traditional companies to survive and compete with social media Even the narrowest relevant market will prove challenging for regulators to defend in court. If opponents of a merger succeed in defining the market as confined exclusively to subscription video on demand, market shares will be difficult to establish.
▶ 0:58:25Muddying the waters of market share are the widespread practices of consumers maintaining many subscriptions simultaneously, known as multi-homing, bundled subscriptions like Disney Plus that might also include ESPN and Hulu, or maybe not, third-party bundles offered through mobile carriers, internet service providers, or credit cards, Amazon Prime subscriptions that might result more from e-commerce interests than from streaming entertainment interests, and different tiered offerings with or without advertising offered for different prices.
▶ 0:58:55Regardless of the relevant market, the market shares agreed upon, courts will then be required to evaluate the competitive effects of the merger. Proposed mergers may hold the promise of significant economic efficiency gains and commensurate benefits for consumers.
▶ 0:59:09But, even horizontal aspects of mergers, such as those involved in Netflix-Warner Brothers-Discovery deal, may benefit Increased selection, cost savings, more accurate recommendations are all Regulators must recognize that traditional media companies require the flexibility to adapt to prevent meeting the same fate as the Blockbuster Constraining these entities from pursuing such arrangements by pretending the market is static will neither benefit consumers nor competition in the long run. Thank you for this opportunity. Thank you, Ms.
▶ 0:59:39Melusian. Dr. Yoon, you are now Good morning. Thank you, Chairman Fitzgerald, Ranking Member Nadler, and distinguished members of the subcommittee. Uh it's a true honor to be here. My name is John Yoon, and obviously we're here to assess the potential combination of Netflix and Warner Brothers and associated assets. I see three main issues, and there are more, but these are the three that I'll focus on. Happy to discuss more.
▶ 1:00:05Number one is the consumer-facing combination downstream in the streaming service market between Netflix and HBO What's going to happen to those prices and the bundles? What's the relevant market to assess that competition? Issue number two, what happens to HBO Max? Does it remain an independent uh streaming option, or will it be integrated? If so, how? Number three, what about the upstream assets?
▶ 1:00:31The combination of Netflix production uh studio as well as Warner Brothers Studios. What happens to that content library, the content creators, that distribution? Is there an incentive to foreclose others from access to that that previously do have access?
▶ 1:00:48So, as I mentioned, these uh invoke both what we call horizontal and vertical issues in antitrust. Horizontal issues are your standard issues of competition between competitors. Think Coke versus Pepsi, Samsung versus Apple. Um those are the same issues that we can see both in the streaming market downstream and the streaming production market upstream. There's also something called a vertical issue, though, and that's the possible control of two or more levels of the supply chain.
▶ 1:01:13And here I think the primary concern that I've seen is that Netflix now will control WB's studio assets and distributions and IP What does that mean for consumers? So, all these questions are going to be governed under the Clayton Act Section 7, which is substantial lessening of competition or a tendency to create a monopoly.
▶ 1:01:33And the courts have consistently examined three markers to whether this is going to be met or not, and that's usually prices, output, and Other objectives have been uh called upon and and looked at uh in at times, but these are the three that almost inevitably the courts will examine. That being said, let's start with question number one, um the combination possibly of Netflix and HBO Max.
▶ 1:01:57I think the key question, as mentioned previously, will be what is the relevant market in which these streaming services compete? Is it limited to just other streaming services like Amazon Prime Video, Apple Plus, Peacock, and Paramount Plus? If so, what's the market share? And we do have debates of whether market shares are good proxies for market power, which is what we're really interested in, but the courts have been clear, this is what they will look at.
▶ 1:02:22So, the combination of Netflix and HBO Max will, according to some estimates, and these are just public estimates, can be above 30%. And I'll mention in a moment why that matters. There are other sources, though, that put it at below So, it'll be a key question what the real data shows.
▶ 1:02:40But assuming it does hit the 30% or more marker, the reason this matters is a 1963 Supreme Court case, Philadelphia National Bank, and it established a structural presumption that if you're above that 30%, there's a presumption that the deal is illegal and harmful to consumers. It doesn't mean it is. There is an opportunity by the parties to demonstrate that the pro-competitive benefits outweigh that presumption. So, it's not an illegal call, but it is a strong presumption and relevant for this assessment.
▶ 1:03:11It's pretty close to 30% the sources I've seen, so that does move it a little bit closer to the parties' favor, but it's still above that presumption. So, it's going to be in the incentives of the parties, and I say that not cynically, but it could be the reality that the market is broader than just streaming services. It could include YouTube, it could include TikTok, it could include cable, satellite, etc.
▶ 1:03:33So, that's going to be a key question and and something that I think um I'm happy to explore further In terms of question number two, will HBO Max remain an independent service? It's a concern I've seen publicly and in forums just in preparation for this hearing.
▶ 1:03:49And what an astounding statistic that Netflix has shared is that 75% of HBO Max subscribers are also Netflix That makes me sort of uh based on my economic training think that this is going to be integrated into some type of premium tier. Happy to discuss further, that's just a prediction. It's unlikely that HBO Max will remain an independent service post-merger.
▶ 1:04:12Number three is the vertical concern that Netflix's control of WB's assets upstream will lead to some type of foreclosure of that. For example, um Harry Potter is available on Peacock, even though that's a WB property. Ted Lasso is produced by WB Studios for Apple Plus. Will all that stop And so, that consideration, I think, will also be part of what the agencies and the courts examine. Um and so, with that, my time is up, so thank you very much. Thank you, doctor. Mr.
▶ 1:04:41Wood, you're now recognized for 5 minutes. Chairman Fitzgerald, Ranking Member Raskin, and Ranking Member Nadler, and distinguished members, thank you so much for inviting me today. This hearing is about competition and consumer choice in digital streaming, and that means we must talk about the string of mega-mergers, both 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.
▶ 1:05:10I must clarify something though before I begin because of the companies involved in these merger talks and confusion about our name, my organization is called Free Press Action, a public interest group that works on media, tech, and telecom policy, and 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, which is the publication Paramount Sky Dance purchased last year before making its founder the editor-in-chief of CBS News.
▶ 1:05:40I 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 Brothers Discovery, the winning bid for now is Netflix's $82.7 billion deal to buy a company that, as Mr. Nadler noted, is somehow always up for sale, and deals that amounted to bad industry bets and huge debts.
▶ 1:06:05Netflix is the largest streaming service in the world with more than 300 million Warner Brothers HBO Max is well over 100 million, third largest in the US by most Paramount is likely the fifth largest streamer in the US, and that combo, of course, would couple two of the big five Hollywood studios, impacting the market for theatrical releases, movies, and TV.
▶ 1:06:27Both 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 in your districts, too. We fear that either deal would reduce competition in streaming and adjacent with fewer choices for consumers and fewer opportunities for writers, actors, directors, and production technicians. Jobs will be lost. Stories will go untold.
▶ 1:06:54Now, 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 left to ensure that the billions saved in promised synergies are passed along, not pocketed.
▶ 1:07:10The job for antitrust enforcers is 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, as the case law says, about alleged benefits to the Either Netflix or Paramount buying Warner Brothers could be presumptively illegal under DOJ's merger guidelines. Members of this subcommittee and others in Congress have suggested so on a bipartisan basis.
▶ 1:07:38Section 7 of the Clayton Act prohibits any merger that would, quote, 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 Brothers, of course, owns CNN and other cable Netflix doesn't want those.
▶ 1:08:09Paramount's Redstone family desperately We're 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.
▶ 1:08:40Even 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 They've capitulated on chilling requests to reshape their newsrooms. The merger that spawned Paramount Sky Dance, as Mr.
▶ 1:09:06Raskin has detailed, was greased by an FCC investigation and a multi-million dollar settlement of a specious lawsuit over editing choices in an interview with then Vice President Paramount installed a former Trump ambassador as a bias monitor, and recently spiked that 60 Minutes investigation into Trump administration Now, Paramount Sky Dance's CEO promises, as Mr.
▶ 1:09:27Nadler says to quote make sweeping changes to CNN if he takes it Tilting a merger review process to facilitate that outcome should be unthinkable under the First Amendment. Should the 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 Uh thank you very much.
▶ 1:09:57Uh we will now proceed under the 5-minute rule with questions and I recognize the gentleman from California, Mr. Issa. Thank you, Mr. Chairman. You know, today we're going to speak about disproportionately the Warner Brothers acquisition, needless to say.
▶ 1:10:12I could begin this by talking about the political differences that have been alleged in the two buyers and the I could, of course, uh continue to talk about the last administration that never found a merger that they could accept and blocked many even when overthrown repeatedly by the courts.
▶ 1:10:33I could, but I won't because in fact this is an antitrust hearing and I'd like to focus on that and I admonish all of our witnesses in their answers to get off the politics and get on to the specifics of antitrust law. So, I'm going to start with uh Professor Jung.
▶ 1:10:50Uh you mentioned uh the Philadelphia case, uh but you had some doubts even though Nielsen has said that in the streaming you have a 37% market share uh already by Netflix, an additional 6% to be acquired.
▶ 1:11:06Is there any reason that we shouldn't believe that that is at least in the ballpark of correct based on one of the largest and most historically uh significant rating Thank you, Representative I appreciate the opportunity to speak on this. Um yeah, I think you're hitting on the key issue, which is the reliability of the data that we're using for this presumption. And this presumption is very important. Again, we can debate whether it should be, but it is standing law today.
▶ 1:11:34Right, but it's it's standing law to push the scale to where there's essentially no further choice in the you more or less close the door. Even if in fact, hypothetically, they're at 29% and let's just say that Warner Brothers is 5%, you're still going over the 30% and few would doubt that you're going to end up with that. Let me uh get into a couple of points that you hit.
▶ 1:12:00in the since 2011, Netflix has increased price 10 times and a total of 39% increase after adjusting for inflation. Is that per se a demonstration of market power by any reasonable definition? So, um I can get in the weeds. I would say that almost every streaming service has some degree of what we in economics call market power. It's not the same as what we think in antitrust. And so, what do I mean by that? So, earlier there was a a chart that was shown.
▶ 1:12:30Well, but let me let me back you up cuz I have limited The reality is that the price and the cost of receiving a streaming service on an adjusted basis led by Netflix has gone up, but not down.
▶ 1:12:44So, from a standpoint of a market a market that is functional that we would normally think lowers cost as volume goes up, would you say that this market shows signs of not being functional based on Netflix consistent lead above the rate of inflation?
▶ 1:13:03The reason why I I'm has some concern about the premise that this is necessarily a problematic market is simply because I saw a chart that showed the highest price increases were from Apple Plus, Peacock, and Paramount Plus who have the lowest share in these markets and the lowest price
▶ 1:13:19And aren't they all still losing money?
▶ 1:13:21Yeah, no, I Okay, so isn't there a difference between when you're making money and you increase prices beyond inflation and when you're losing money and you try to minimize your losses?
▶ 1:13:30that's fair. Okay, I want to go on quickly. Um You talked about vertical and horizontal and there's plenty of case law including the Supreme Court case that broke up the relationship between the studios and the theaters being owned.
▶ 1:13:45Aren't we again in a situation where if Netflix post-acquisition controls a massive library to the exclusion of others that in fact, we have the same situation again in which and I'll just use my own words, if you can exclude and you are a must-have and must-pay and isn't that in fact a situation in which at a minimum everyone would have to have Netflix in order to have access to
▶ 1:14:15not just new production, but a vast library of that in fact, by definition, every child grows up watching? I think it's a relevant concern. It's something they'll definitely look at for sure. Uh I did look at some statistics that showed what is the percentage of of Warner Brothers in terms of theater production and it's at about 15 to 20%, so roughly 80% is outside of that. So, I I think that And of course, theater production is important. I was talking about libraries and they are both important.
▶ 1:14:43Let me just close with uh one closing question, which is you've looked in the past at the years that this committee oversaw the potential mergers um to create competition against Verizon by Sprint, AT&T, T-Mobile, ultimately making a decision that a relative duopoly was better than one strong player and many weak. Aren't we in many ways in that same situation? If you could opine on that.
▶ 1:15:12I think it's going to depend on how we define the relevant market in terms of what is really constraining Netflix's price. But yeah, if it's fairly narrow, yeah, the consolidation is definitely going to be uh something that's sufficient for probably the presumption. Thank you, Mr. Gentleman south. Gentleman yields back. Now recognize the ranking member from New York, Mr. Thank you, Mr. [clears throat] Chairman. Mr. Wood, um supporters of large media mergers often promise innovation, better services, and more content.
▶ 1:15:41Looking back did those mergers deliver for the Uh in a word, no, I don't think they did, Mr. Nadler. I mean, you've listed a litany of deals that involved this company itself. Warner Brothers is now currently up for sale again. I would say with respect to streaming, for example, that yes, there has been innovation. Consumers have benefited from some of these technological changes, but it's not because of the mergers.
▶ 1:16:02So, the merger promises that are made are often paper-thin, very hard to enforce if they're even real in the first place, and companies routinely break those promises because there's very little antitrust enforcers can do after the fact to unwind a deal. That's a pretty extraordinary remedy. So, if they promise not to fire people or promise not to raise prices and they do um there's there's not much people can do besides wag a finger at them.
▶ 1:16:24Why why would unions such as the Writers Guild are opposing acquisition by the Netflix or Paramount because of concerns that consolidation will reduce employment, compensation, and creative What happens to independent producers and creators when the number of potential buyers for their work shrinks? Yeah, so thank you. I mean, we've spoken to some of those writers. We've spoken to some of those independent producers. They're very concerned and rightly so. When the number of buyers for their work shrinks, it's not just that there are fewer open doors, there are fewer doors at all.
▶ 1:16:52So, they have fewer places they can take their content. They also have the loss of competition and diversification in the market. Fewer smaller independent producers or fewer scrappy competitors who are willing to take a chance on something different. So, I think it tends to homogenize content and by design reduce the number of outlets and number of choices they And what would be the effects of these consolidations be on the diversity of content that we see today? Well, thank you. I mean, as I was saying, you know, I think it would be less diversity.
▶ 1:17:18I don't know if there's a metric we can apply to that, but we do see companies in the broadcast space, in the streaming space, in the studio space homogenizing their content, making things more so-called mainstream, taking fewer risks, needing more money to come back in through the door in order to justify the huge budgets for the few features they put out. So, it tends to reduce price I'm sorry, it tends to reduce choice and increase prices and just to as you said, reduce diversity and the differentiation between the products these companies have to put out to compete and survive.
▶ 1:17:47And reduce the amount of uh conflicting information and opinions given to the public? Yeah, I mean, that's something our organization has worked on for years when it comes to the news and competition there. The FCC's test for that are different from antitrust, but related in many ways. They look for more competition, more diversity and localism and we're often told that well, the only way we can have more competition in local news is to have fewer competitors. The only way to have more diversity is fewer voices. The only way to have local content is to nationalize everything.
▶ 1:18:14And we frankly don't believe those claims and we've seen them harm communities time and again.
▶ 1:18:20Everything you just said seemed very concerning. The way to to have diversity is to have fewer voices. Yeah, I mean, you know, it's it's as as my colleagues on the panel have said, I mean, sometimes you're going to have a a situation where if a firm is failing or can't compete, then a merger might save them and preserve that voice. We just are very skeptical of those claims because in Warner Brothers' case, for you know, I think by last year's metrics, they were the second most successful studio. They're the third largest streamer in the country.
▶ 1:18:49So, the notion that a company simply has to be sold or else the shareholders shareholders won't make any money to us is is very questionable. I know that the streamers in general have not made as much money as they like and some have lost money. So, there are legitimate questions there about the profitability of streaming, but as a going concern and an overall business, we just simply are very skeptical of claims that these companies need these mergers to survive or thrive. Thank you. I understand that Netflix has made promises that would mitigate possible competition concerns.
▶ 1:19:18In particular, it says that that would continue to sell shows to rival streamers. How should these promises be considered in the analysis of potential anti-competitive or public policy harms? Uh if you're asking me again, I mean yes, that's as I said a moment ago, I think that these promises are very hard to enforce. So, I can imagine a condition in a merger approval if it went through. It's just that whatever these companies agree to, it's sometimes easy for them to lawyer their way out of and not even technically break the promise.
▶ 1:19:46And then once that promise is broken, as I said, there's very little that enforcers can do to uh unscramble the egg and put things back together and and make companies whole who aren't getting the benefits of these promises that were Thank you, Mr. Chairman. I have a number of uh unanimous consent requests for the record from a series of labor groups coming out against the or raising concerns with the Netflix-Warner Brothers merger. Very good. Go ahead.
▶ 1:20:15Unanimous consent. Uh first is the IDA statement opposing a merger involving Warner Brothers-Discovery. Without objection. The DGA statement on Warner Without objection. The SAG-AFTRA statement regarding proposed Netflix-Warner Brothers transaction. Without objection. Prepared statement for the record of the Writers Guild of America West and the Writers Guild of America East. Without objection.
▶ 1:20:43The Hollywood Teamsters uh Warner-Netflix deal is another call for long-term entertainment workers. Without objection. And finally uh the Producers Guild of America. Without objection. Gentleman's time has expired. Now I'll recognize
▶ 1:20:58Mr. Chair. the gentleman from Virginia for his questions.
▶ 1:21:03Thank you, Mr. Chairman. Uh thank the witnesses for being here. Timely hearing on a at this moment in time with this snapshot of a marketplace in constant change and constant motion. Uh we recognize that the country operates under free market principles and businesses should be able to transact as long as they don't create clear antitrust problems. Clarity is something that is is uh in the eye of the beholder, but I do think in contrast to Mr.
▶ 1:21:31Woods' opinion, general the standard is not general skepticism about whether a a company needs a a mark a merger to survive. That's really not what we're talking about here. Uh we're talking about the definition of the relevant streaming market and you know, the regulators and how they're defining it.
▶ 1:21:50Miss Mulujan, why don't you have a go at how you would define the relevant streaming market today for antitrust purposes and what the single biggest mistake that regulators are making when defining it? So, I think we had a very helpful example recently with the decision in the Meta trial, which was seeking to unwind a merger. And unfortunately, the kind of anticipated questions like this and said, um this is just not a market definition that they buy.
▶ 1:22:20It had excluded too many entities that provided real competition to Meta. And I think that the mistake you could make here would be the same. Um I'm not privy to the kind of privileged information that talks about market shares or eyeball time spent on streaming. Um but regulators probably will be. And it'll be their job to make a case that um it's not comparing apples to apples in terms of finding out who might be a good substitute. It's about what consumers feel as a substitute.
▶ 1:22:50So, um that would include saying, you know, it it might be apples to oranges with some of these streaming services and other variants in social media. But would a consumer maybe substitute an apple for an orange if they had to? They probably will. So, I and that goes to a a really as as we've all agreed is incredibly important piece of this is what is that market share. And if it's above that 30% threshold, it doesn't mean that it's a closed case and it's anti-competitive. You still have a court that's going to assess what are the competitive trade-offs here.
▶ 1:23:20I think you'd have a very difficult task if it even just is above that 30% mark to say there aren't going to be economic benefits to consumers here. But if you expanded the market definition, you might not even get to that 30% number. It's it will be for the courts to decide, I suspect. Dr. Yoon. How would you define relevant streaming market today and what's the single biggest issue facing regulators and mistake that they might be making?
▶ 1:23:45Yeah, your question hits on what I think will be probably 80% of the investigation and and the debate between the parties and the courts and the agencies. And so, I think it is natural to think it's a streaming market. They're probably the closest competitors. Uh but as just mentioned, does it include other services? And let me just share with you um sort of the lines are kind of being blurred. So, Netflix also offers not only an on-demand, but also live sports. They offer uh podcasts. They offer video games.
▶ 1:24:15Uh YouTube TV, the linear TV that replaces cable, now has on-demand. YouTube itself will now carry the Oscars. It's the the line is blurring between these and I say that not because I think it's going to be defined broadly. I say that simply because it's hard to uh cabin these platforms into specific uh categories that we kind of want to do. And so, it will be the job of the agency It is a data question. No one can sit here and say what the market will be.
▶ 1:24:42It's going to be based off of the Under current antitrust law, when does vertical integration in media markets pose competitive harm rather than generate efficiencies? So, that's the the the key issue that So, the key question I think there are other vertical issues, but as I mentioned in my opening statement, I think the key vertical issue is whether Netflix's control of Warner Brothers Studios' IP property and distribution rights.
▶ 1:25:07Does that create the opportunity for them to foreclose third parties previously had access to those assets? And so, that question is something that is a very detailed one. It's going to look at margins at the various levels. What's their incentive to do so? What's their market share upstream and downstream? What are there substitutes for these IP properties? These questions have already been asked here at this hearing and it's going to be asked by the agencies. Again, we're not going to know until we see the data.
▶ 1:25:35I will say this though, usually this is fixed through a commitment by the parties to offer this content through arbitration uh going forward 5 to 10 years typically. This was Comcast-NBC Universal. This was AT&T-Time Warner. They're going to probably do the same here. And studies have shown it has been effective in preserving competition. This is done by Dennis Carlton, etc. So, these commitments are court-ordered and enforced. And I'm guessing Netflix will offer the same. Thank you.
▶ 1:26:05Yield back. Gentleman yields back. Now recognize the ranking member of the full committee, Mr. Raskin again. Thank you, Mr. Chairman. Um if Paramount were to acquire Warner Brothers, it would put CNN under the same ownership as CBS. And when the Ellisons who own Skydance were seeking to acquire Paramount, they made Trump-friendly changes in the newsroom, including installing an ombudsman, which news staff um uh referred to as a hall monitor for them.
▶ 1:26:35And so, we can only assume uh the same kind of fate for CNN. Mr. Wood, when there is consolidation in the news uh how does this affect the freedom of speech and expression in the marketplace for ideas generally and specifically in the Trump period given the very specific phenomena that have arisen in terms of the review process? Yes, thank you for the question, Ranking Member Raskin. I I think your question lays it out well and there really are two distinct threats at least.
▶ 1:27:04One is just typically speaking, when you have fewer competing voices, you have fewer people working to get stories, you have fewer risk-takers. So, reduction of competition reduces the number of opportunities to even tell different stories. But in this administration, we've seen not just consolidation at large as a problem, it's the merger process itself being used, as you detailed so well, as a carrot. And basically saying, if you don't agree to change your news coverage, then we won't approve your deal. And that's the kind of thing that should be completely out of bounds, but has happened very often with this
▶ 1:27:34What's happening at CBS News under the new management? Well, you know, I'm not a media critic, but I can certainly see what's happening and I I know even yesterday there were concerns about the evening news and how it was being used to uh praise the administration rather than to potentially uh criticize its actions. And so, you know, it's the litany of uh changes that you discussed, the the pulling of the story from 60 Minutes, all the changes to to the evening news and the way that they are seemingly looking for administration approval of their news rather than reporting on the government as I think any journalist would want to do.
▶ 1:28:05Well, I'm really a stranger to antitrust law. I never taught it. I never even took it. So, I'm going to be reading some books on it this year in anticipation of maybe a a change in our political fortunes in the new Congress. Um it Is there anything within antitrust law which considers the specific First Amendment implications with respect to media mergers that makes it a different kind of analysis from other business antitrust analysis? I mean, I wouldn't say I I would want to look that up myself.
▶ 1:28:34I did take it, but it was a while ago now and I've done a lot of it in my career. Dr. Yoon, you might know.
▶ 1:28:38Would you It's a great question. I would say that generally speaking, court precedents would say no, they wouldn't examine
▶ 1:28:45It's just treated the same way. It would be It's output prices and innovation and First Amendment issues would fall. Okay. I'd like to ask all of our witnesses, um does everybody agree that federal antitrust agencies should be subject to intensive congressional oversight? Starting Dr. Wood with you. Dr. Yoon, do you agree with that? Seems quite reasonable. Yeah. Miss Mulujan. Yes. Yes.
▶ 1:29:15And Dr. Ezrachi. Yes. All right. So, when I raised the question of whether corruption was interfering with proper antitrust law analysis, I was chided by one of my colleagues for ranging far afield from the subject. If corruption has actually entered, and perhaps some people can never see corruption when it comes to Donald Trump, but so set him aside for a second.
▶ 1:29:45If corruption actually entered the antitrust review process through money corruption or political influence, would that be a problem? And again, I'd like to maybe ask to each of you. Yeah. Mr. Wood. I mean, it would definitely be a problem. I wouldn't be naive and think that political influence has never played a role before, but what we're saying so extraordinary in this administration is the openness of it and the use of antitrust and merger review, I would say the misuse, to ring out conditions from companies who want approval of their deals.
▶ 1:30:15Yes. Dr. Yoon, do you agree? Yes. I've I was at the agency 18 years. I think I'm an antitrust purist. I think it should be based off of the staff there and their recommendations.
▶ 1:30:25So, it's an economic analysis. It's not a question of whether you can mobilize this lobbyist or this political force to your side.
▶ 1:30:32Absolutely. Ms. Melugin. Yeah, I'd agree. This should be matters traditional laws established in a bipartisan way over the last 40 years, the consumer welfare standard and economic analysis, no matter who is installed in the any given Uh yeah, I'm against corruption in
▶ 1:30:54All right. Mr. Wood, let me come back to antitrust law did start with the idea of both benefiting the consumers, but also benefiting society by having competitive forces. Would you just say a word about what consolidation means generally for a free society? Well, your question about antitrust and First Amendment concerns, I think it's obviously valid and important in the media context. And so, there's a marketplace of ideas that has shrunken too.
▶ 1:31:20And so, I agree with my colleagues, the market questions are the paramount question, although I shouldn't say paramount in this case, but you know, that we have to be certainly cognizant of the impacts on our civic information and democracy being impacted by the loss of that source of information.
▶ 1:31:35Gentleman's time has expired, and I'll recognize the gentleman from Texas. Uh Ms. Melugin. Consumers increasingly increasingly subscribe to multiple streaming services, and in recent years subscription costs have gone up significantly. At the same time, most streaming services haven't been profitable despite increasing subscription cost. Hard to say those words. You struggled too. I get it. Where do we go from here? And will subscription costs keep rising?
▶ 1:32:03Will they eventually run out of business due to lack of profitability? And how does regulating the current market help things for consumers and competition? I think that's a bundle of excellent questions and observations that I would simply say that the best way is that they're still sorting this out. It's a relatively new um advance here, the streaming services, and there's going to probably need to be some amount of consolidation.
▶ 1:32:27There's probably going to be some amount of Failing in a market system isn't the as government-imposed failure on these companies or having taxpayers on the hook. It's kind of the natural part of creative destruction that happens. There might need to be some culling of the herd. Uh there might need to be some for achieving economies of scale.
▶ 1:32:50And I think that even in the different forms of streaming services we see now, like Amazon Prime is a fascinating example of one that is tied to a e-commerce delivery package. People are try These companies are trying lots of different approaches to become profitable and to give consumers what they want. This latest deal that we're talking about today is a lot about combining Netflix distribution advantages and expertise and recommendations and things like that with a very valuable library content at Warner Brothers.
▶ 1:33:21Will that be successful to them and they'll be able to gain more market share if this deal is allowed and drop I don't know. It's not about for me, my job isn't picking the winners or losers or telling these companies how to act. It's saying that these are the sound rules of the road in traditional antitrust, and we should stick to that whoever we're evaluating. Thank you. Dr. Ezratti, forgive me if I mispronounced your name.
▶ 1:33:46In the current market, only Netflix has been consistently profitable with HBO and Disney Plus only recently turning a profit, while most streaming services operate at a loss. Correct me if I'm wrong, too. What impact would preventing a merger between Netflix and Warner Brothers or Paramount or any other company have on the market or any of these businesses? And will we ensure competition, or will it lead to a situation where companies will end up running out of business like Blockbuster? Uh thank you um for that question.
▶ 1:34:15Um There was a lot of We're good at that here. I'll take it one by one. So, I think it's uh I think it's important to let the market sort this out. This market has been very successful in generating growth and innovation and new And it's at the core of it is these companies are trying to create content that is appealing to consumer.
▶ 1:34:43Uh at the same time, there's been growth in streaming. just because you are losing earning negative margin at current demand uh it doesn't mean that that's going to continue as demand grows. And that's been the driving dynamic of this um of the space.
▶ 1:35:09it is rational for companies to create more and more content to gain more consumers for your streaming um service so that as demand grows, uh you'll be able to earn higher margins uh later on.
▶ 1:35:28As far as uh the impact of this deal, I think that this is just market trying to reallocate capital to meet demand the best it can. There um In terms of Netflix and um and Warner Brothers, they're complementary assets on both sides.
▶ 1:35:52Uh and the way you could combine these assets in order to generate even more compelling content, stream content in a more efficient way, find consumers, create content that is appealing to viewers. This is how you grow the I think that's going to be good uh for Netflix um and Warner Brothers, I think. I don't know.
▶ 1:36:22The The future will tell. And I think it's going to be good for the entire industry. We need this kind of dynamic competition to drive more innovation, better content, better ways of delivering content to viewers, and also to uh use data more effectively to reach viewers with content that uh they'll find appealing. Thank you. Gentleman yields back.
▶ 1:36:51Now, recognize the gentlewoman from Vermont.
▶ 1:36:53Thank you, Mr. Chair. I want to start by just doing some level setting. Americans don't like these mergers. Uh they don't want a few giant companies controlling what they see and what they hear. We want choices. We want more choices. We want artistic freedom. And we don't want a handful of companies deciding the content that we see. I hear this over and over again from my constituents.
▶ 1:37:16When these giant companies merge, things get better for the people at the top over and over again, every single time, and worse for the rest of And I want us to remember that two of the three companies we're talking about today exist because of at least one previous merger. It wasn't long ago that Paramount, Skydance, Warner Brothers, and Discovery were separate companies. We need competition. We do not need more consolidation. Mr. Woods, thanks so much for being here today.
▶ 1:37:45Why is it that our media landscape right now has become so Oh, thank you for the question, Congresswoman. I mean, I think it's just decades now of lax antitrust enforcement, and that certainly started to turn a corner with the last administration. And I think even the first Trump administration, we did see efforts there to try to block AT&T from buying Time Warner. So, you know, there've been some bright spots. There've been some mergers that we've opposed that have been stopped, like AT&T buying T-Mobile, Comcast buying Time Warner Cable, but those are few and far between.
▶ 1:38:14There's been this sort of flood of deals that have gone through. And as you said, it always gets better for the people in the C-suite, but much less often for their customers. I agree, and I I agree with you, too, that it is lax antitrust enforcement. And you know, you touched on this earlier, who wins, who loses when these mega mergers happen? Let's put a finer point to it. Who wins? Yeah, I mean, it's the it's the companies and their shareholders, although not always, because a lot of these deals have been bad bets for them as well.
▶ 1:38:42We've talked today about potential innovation and efficiencies and competition being improved in some sense by mergers. And I wouldn't say that's impossible. I would just say that's a pretty high bar. So, what you really need is for those efficiencies to be passed along to people rather than just pocketed by the companies. You need to have remaining competition. I agree. Sufficient incentive for them to not just pocket those savings, but to actually have to put them back into the business and try to keep their customers happy. I agree.
▶ 1:39:07And And you know, from what we've heard so far, uh Paramount and Netflix have submitted bids that already raise significant concerns. And we're at the start of what's going to be a very long battle about this. And our committee is not responsible at all for deciding which deal or neither violates the law. That decision is in the hands of the Department of Justice.
▶ 1:39:32But, we know that the DOJ has not been unbiased. That is a a strong concern that many of us on this committee have. At the last meeting of this subcommittee, Roger Alford, a DOJ whistleblower, described the pay-to-play climate at the Antitrust Division. And President Trump recently has said he will be, quote, involved in the Warner Brothers deal. What do you think he means by that, Mr. Westerwood, when he says he's going to be involved? What's he talking about?
▶ 1:40:01Well, I'm smiling because it sometimes it's down to which movies he wants to see made, so it can get kind of ridiculous, but I think it's also just about the Trump family's own fates and fortunes here, and then these political choices that again are, you know, it's not that the political choices aren't real or somehow are completely invalid, but the government should not be imposing its will on companies. That's a violation of the First Amendment when they're dangling antitrust review and approval based on content changes.
▶ 1:40:26And of course, as we're all saying, this should be a market analysis, so I agree with my fellow witnesses that market definition is key here. The merger proponents will always try to to expand that market and say we're not that concentrated. Opponents of the deal will try to shrink it. Those are again interesting questions, and they're asked in good faith, but that doesn't mean that the White House weighing in does anything to advance that analysis. It probably just impedes it and takes it off track.
▶ 1:40:50And and our job essentially here is to be the watchdog, to be doing the oversight, to be the eyes and ears of our constituents who can't be in this committee hearing room. And I urge the chair of this committee to take the role of this committee seriously. There is strong evidence that our antitrust enforcement system is being corrupted. And we have to use our constitutional authority to investigate.
▶ 1:41:19Monopolies hurt all Americans, and whether it's in meatpacking, whether it is in fire truck manufacturing, whether it's in the monopoly of the seed industry, or in this case, if it's in the media landscape, we have to be effective watchdogs and not just roll over for an administration that is not doing its due diligence for the American people. And with that, Mr.
▶ 1:41:42Chair, I have two unanimous consent uh, that I bring before the committee in relationship to whether further consolidation in the industry is going to be a threat to movie theaters and theatrical releases. Movie Theaters Dread Any Warner Brothers Merger by The Hollywood Reporter. Objection. Second one, Gen Z went to movie theaters most often in 2025, according to new exhibition report. Thank you so much, and I yield back.
▶ 1:42:09Mr. Chairman. Without objection. Mr. Chairman. The gentlewoman yields back. If I could, while we're on unanimous consent, have a unanimous consent request from the Chief Legal Officer of Paramount Skydance Corporation for a statement to be entered into the record. Without objection. The gentleman from North Carolina is now Thank you, Mr. Chairman, and thank you all to the panel for your time and your expertise that you've given today. Uh, real quickly, uh, Dr.
▶ 1:42:33Oxenreider, um, is the government, if the government is going to intervene to stop these mergers, it has to prove that the merger is eliminating competition rather than creating benefits for the consumers. Now, you mentioned in your written testimony, um, a phrase that caught my attention when you talked about significant efficiencies that would counterbalance any harmful effects associated with an increase in market concentration.
▶ 1:43:00What potential efficiencies could you foresee arising from the mergers between Warner Brothers and Netflix or Paramount? Uh, thank you, Congressman, for that question. So,
▶ 1:43:13there are several sources of Uh, the most obvious one is that this is a vertical deal. So, both That means that, um, I'm talking about Netflix and Warner similar the same goes for, um, Paramount and Warner Brothers. Means that they're both creating content and distributing content.
▶ 1:43:38So, by combining the distribution channels of both and Warner Brothers, there more efficient ways of distributing content to viewers. And sometimes you could achieve, um, elimination of double marginalizations, so that you don't charge your affiliate a margin, so that you're saving costs. That's potentially cost savings.
▶ 1:44:04Uh, another source of efficiency may be better use of data. Uh, one of the things that Netflix does very well is recommending shows to people who are likely to enjoy those shows. And that requires a lot of data analysis, also creation of shows that are going to appeal to the right audience. Uh, the shows that people are going to watch. That's very risky, requires a lot of data.
▶ 1:44:34By combining the data of both HBO Max and Netflix, uh, they will be able to better understand what viewers want to see. They'll be be they will be better able to market the shows, so that the right show the right content is reaching the right, um, viewer. So, those are, uh, two of the bigger ones, but I there probably others. Very good. Thank you, sir. Ms.
▶ 1:45:03Melusian, in your written testimony, you did mention that today's, calls for an antitrust intervention in digital streaming markets is similar to those of the past. Um, how is this conversation we're having today similar to those in 2005 when you specifically talk about Blockbuster seeking to purchase its rival Hollywood Entertainment?
▶ 1:45:24I think it's just a big temptation for all of us as human beings and regulators especially for whatever reason, uh, to take kind of a snapshot of things as they are and view them as static, and then deal with those problems as they see them. But in fact, of course, we have to remember and and we get reminded periodically, it's not static, it's dynamic. And while the marketplace is out making changes that no regulator should be expected to understand.
▶ 1:45:52You know, there's a certain amount of economic data that should and will be evaluated in whatever deal ends up happening. That's fair, there's great precedent for that. There's considerations like efficiencies offsetting any potential competitive harms, that's great. But at some point there has to be some amount of regulatory humility that also enters the conversation that says, you know, we can't actually predict um, to say how how will Netflix do after this deal? I I don't know, they don't know.
▶ 1:46:21The people who have skin in the game usually make the best case, but we've heard about mergers that weren't successful in the market as well. No one can know the future, and you just have to sort of keep a little bit of deference to market forces and interested parties in your mind as you look at these deals. Are there any specific mistakes that you might reference that regulators made in 2005 that regulators today should avoid?
▶ 1:46:43I think not looking at the bigger picture in terms of, you know, what what technologies are going to come online that sort of overthrow the whole system, right? That we all used I I sadly am old enough to remember, uh, renting DVDs at Blockbuster and Hollywood Video. And then, when things got really fancy, there were those boxes at the grocery store, amazing innovation. Um, Netflix came along and we couldn't believe they were doing it through the mail, that was wild, and we loved that, too.
▶ 1:47:12You know, there's other factors outside the narrow band of the data regulators are going to look at in this that are happening outside, but nevertheless might be impactful. I think you have to make sure that by intervening in these market deals, you're not preventing some of that beneficial innovation unknowingly. Thank you. I yield back, Mr. Chairman. The gentlewoman yields back. Now recognize the gentleman from California. Thank you, Mr. Chairman.
▶ 1:47:39I want to welcome our, uh, speakers today or I represent Orange County, California, Southern California. My biggest employer in my district is 40,000 jobs, plus. You can understand the multiplier effect Tremendous economic activity. Southern California, California.
▶ 1:48:03The entertainment industry, film big sector, and the fourth, fifth largest economy in the world. That's our bread and butter in California. Entertainment. all of you know, COVID, AI, other factors have really hurt our job in the entertainment industry, Hollywood Losing a lot of jobs.
▶ 1:48:35I know a lot of graduates from the local best film schools in the country, USC, the other schools, a lot of those graduates can't find jobs And you heard my colleagues today presenting letters of concern, opposition to these mergers, from labor These folks are concerned about their jobs, bread and butter.
▶ 1:49:02I'd love to hear your academics today, your analysis today, great stuff. But back home, people are concerned about their jobs. Where are they going to feed their families tomorrow? A lot of uncertainty. So, I'm going to ask each and every one of you but however you can answer, are these mergers going to create jobs? Are they going to stem the current loss of jobs that are happening, Mr. Woods?
▶ 1:49:33Thank you, Congressman. We would certainly expect them not to stem that loss of jobs and to increase it. I think recent deals
▶ 1:49:38Dr. Yoon? have shown that. I I genuinely don't know. Ms. Milligan? I think there's a chance that some jobs will be lost and that some jobs we can't articulate at the beginning will be created as well. Dr. Ezrachi, please excuse me for mispronouncing your name.
▶ 1:49:56I don't know if they'll create jobs or lose jobs. Uh So, you have two of you that are uncertain. For sure, loss of jobs and possibly loss of jobs. Hollywood, best films in the world, best entertainment in the Arguably, yes, maybe? I don't know. Those blockbusters out a lot of my constituents worked on them.
▶ 1:50:25so, let me ask you again, specifically if Netflix wins this bidding competition, are they going to create jobs, Mr. Wood? I mean, again, it's hard to predict the future, but when they say synergies, they mean job cuts. They mean other kinds of reductions in spending.
▶ 1:50:39Job cuts. Dr. Yoon? I don't have a prediction. Ms. Milligan? I I cannot say for certain. Ms. Ms. Dr. Ezrachi? Um I don't know if they'll create jobs, but if there's growth in the industry, if there is growth in streaming, in more content, I think that will create jobs. In California, in the US, somewhere else? I don't know where. If Paramount wins this bidding creating jobs, Mr. Wood?
▶ 1:51:09I think that's a more classic horizontal merger in the studio space, and so no, again, I would think it creates jobs.
▶ 1:51:14I don't have a prediction on that, either. Ms. Milligan? It'd be my same answer. I'm unsure. Dr. Ezrachi? I don't know. So, here we are as the members of Congress debating M&A, economic activity in this country, job bread and butter, and we're still not quite sure what the effects will be of these this M&A activity. Is that what I'm hearing today? Or we're hearing that it'll create job losses.
▶ 1:51:42Is that I mean, again, Congressman, we can only look to the past. We can't predict the future, but mergers are designed to save the companies money, and those efficiencies might be real for the shareholders, but they often
▶ 1:51:52begin to understand why we have concerns by workers in this area when we don't have answers, and it sounds like maybe this is not going to be good. So, let me turn very quickly my last 30 I- are these mergers going to lower the ticket, the amount I will pay monthly for entertainment at home? Mr. Wood? No, again, I don't think so. We've seen historically that prices have gone up historically. I think for some users, yes.
▶ 1:52:21For some users, maybe not. Ms. I agree it'll be probably mixed results. Mixed. Dr. Ezrachi? I don't know. So, here we go. We don't know, probably job losses. So, now we understand why people on Main Street are concerned. Thank you very much, Mr. Chairman. I Mr. Chairman, Ms. O'Neal's back. I have three UC requests. Uh before I I'd like to say that I did not know that Mr. Correa represented Disneyland.
▶ 1:52:51That sounds like a uh future field hearing for this committee. Offer accepted, sir. Thank you. You got Mr. Nadler's recognized. Thank you, Mr. Uh I have I ask unanimous consent for a statement for for the record of the American Economic Liber- Liberties I ask unanimous consent Without objection. I ask unanimous consent for an article on Planet Money titled The Warner Brothers Curse. Without objection.
▶ 1:53:17And finally, I ask unanimous consent for an article on The Verge uh titled There Are No Good Outcomes for the Warner Brothers Sale. Oh, I have one more. Without objection. And I uh finally, I offer unanimous consent request for an article in the Free Press titled A More Perfect A More Perfect Media, Saving America's Fourth Estate from Billionaires, Bro-ligarchy, and Without objection, the gentlewoman from Wyoming is now recognized for 5 minutes. Thank you, Mr. Chair.
▶ 1:53:46Streaming I want to talk a little bit about some definitions before I get into my questions, just so that I can understand what your testimony is. Streaming services send video data through broadband internet to televisions, computers, phones, tablets, and other devices. Linear streaming services deliver live channels over the internet and are commonly considered as alternatives to cable.
▶ 1:54:08That would be your YouTube TV, Hulu Live TV, Sling TV, And then on-demand streaming services generally provide a catalog of shows and movies for consumers to watch without waiting for downloads, scheduled airtimes, or physical copies like DVDs. And that would include Netflix, HBO Max, and Amazon Prime. Warner Bros. Discovery, the company that owns HBO Max streaming services, Warner Warner Bros.
▶ 1:54:35movie and television production studios, and linear cable television networks including CNN, is currently up for sale, and at least two companies, Netflix and Paramount, are actively competing to buy it, looking at a sale of upwards of $100 billion.
▶ 1:54:52Professor Yoon, and I would like to start with you, and that is, as you noticed uh in your testimony, an initial challenge that antitrust officials will need to overcome is how we actually define the relevant market in this new streaming world we live in.
▶ 1:55:08Now, can you explain for us why some parties might want this definition to more broadly include linear TV and social media platforms, and why other parties would want a narrower definition focused just on the streaming? Yeah, it's the classic struggle in anti- in antitrust cases.
▶ 1:55:26Narrow definitions obviously mean higher market shares for the merging parties, and that usually is what the challengers of a merger want. So, these the agencies will probably challenge this merger if they find sufficient evidence that the market is just streaming, and then they'll go forward. But the parties' incentives clearly is to dilute their market share, their influence based off of the competitors. So, they're going to want to have a broader market to include, as you mentioned, YouTube, YouTube TV, cable television, satellite.
▶ 1:55:56The inclusion of YouTube into the market will probably destroy any opportunity for this merger to be blocked, because that will then mean that consumers have a viable option to move their attention to YouTube. If the data is there, then I don't think this will be challenged. So, that is everything in terms of this debate. Okay. So, do either the narrower definition or the broader definition, which which would be better for the So, for me, the consumers care about their options and choices.
▶ 1:56:26So, I would hope that the market definition adopted by either the agencies of the part- parties map to truly what the consumers have options over. So, if the data does show that consumers, when they don't when they see a higher price for Netflix, people leave Netflix. Data consistently shows that. Where do they go? Do they go to HBO Max? Do they go to Amazon Prime Video? Or do they move to YouTube, social media, and other platforms?
▶ 1:56:49If the data shows that they move to the latter, then that to me is a great deal of evidence that the merger does not consolidate market power, because the consumers haven't given them that power. Okay. Well, then consolidation of streaming services may appeal to consumers who are frustrated with the fragmentation of the current market across multiple apps and platforms requiring different subscriptions. Netflix is the original streaming service and still today considered one of the premium on-demand streaming services.
▶ 1:57:18It is also one of the few that is actually profitable so While other platforms are trying to grow and turn profits, what are the potential negative effects for consumers by allowing the top premium service to acquire another? Mr. Yoon? Um what are the potential negative consequences? Yes.
▶ 1:57:38I think that if I had to predict the negative consequence, it's most likely going to be those consumers who have no value for HBO Max, yet Netflix will most likely increase the price to those consumers to access the the platform, because it's going to integrate that content. The winners are most likely HBO Max users today who also subscribe to Netflix. I would predict their bundle price would be lower. So, that's what I meant earlier that I think it will be a mixed bag, and it will depend on who's the bigger consumer base. Okay.
▶ 1:58:08Just one last question. Balance is obviously needed between preserving competition and responding to these fragmentation concerns. Does allowing the market's biggest player to acquire another major player appropriately strike this balance, or is there a better way? Mr. Yoon? Uh gosh. Um it's a great question. I I'm just so limited to whether this deal violates the law or not, and that's kind of my focus. I think there are other kind of factuals could possibly be better. Okay. Well, thank you.
▶ 1:58:38With that, I yield back. Gentlewoman O'Neal's back. Now recognize the gentleman from Illinois for 5 Uh thank you, uh Chairman Fitzgerald. Uh everyone agrees that the rise in on-demand digital streaming has transformed and changed the media and entertainment industry.
▶ 1:58:57But while the industry has been transformed, our goal remains the same: enforce antitrust laws and ensure an open competitive market that protects workers, consumers, allows new entrants, and promotes creativity and free speech. Mr. Wood, thank you for being here today.
▶ 1:59:16Netflix and Warner Brothers argue that the industry has changed so much that the relevant market includes other forms of digital media, including social media. Are you skeptical of that definition? I'm listening, but I am skeptical, yes. As as Dr. Yoon was saying, I mean, that is really the entire question here and the entire ballgame.
▶ 1:59:38And the question is not just will people switch to a different source, but will that behavior discipline the ability of the merging entities to raise prices or reduce output. And so, there's a couple different questions. There's lots of different metrics. I think asking about all of those metrics is valid, and that's really the job that we need the antitrust enforcers to do very carefully. Thank you. Another important goal of antitrust enforcement is protecting workers from anti-competitive and abusive practices, of course.
▶ 2:00:07This deal is just the latest in a series of mega mergers in the entertainment industry. Every time the companies promise to protect workers, every time they betray workers. After Disney, for example, acquired Fox, 4,000 jobs were lost in the years after the AT&T Time Warner merger, 77,000 workers were laid off.
▶ 2:00:33And since merging with Skydance only months ago, Paramount has already laid off 1,000 workers and promised to lay off thousands more in the coming months. Mr. Wood, given this history, are you concerned that additional consolidation in this industry will harm workers through widespread layoffs, reduced compensation, and other anti-competitive Yes, thank you, Congressman.
▶ 2:01:01We are very concerned, and as you said, that's the track record, and I think that's the design of these deals is to reduce the headcount, and that's how companies make a lot of the money that they can, in addition to being able to raise prices when they face less competition. I think it was suggested earlier that antitrust should not be concerned with labor issues. I don't think that's true. I I don't know that it historically has been enough, but there are courts that agree that labor issues are very much the province of antitrust law.
▶ 2:01:22And so, we hope that the analysis will take that into account as well, as well as it's not exactly the same as a typical labor market maybe, but the the creators, the artists who are putting these products out there, it's almost a shame to call them products. I mean, they are not employees of these companies, but they also would face reduced opportunities for places to find their work made and put on screen if these mergers go through and if the number of films made continues to Thank you.
▶ 2:01:48My criticism of the Netflix deal is not an endorsement of the offer by Paramount, a company that's controlled by right-wing oligarch Larry Ellison and his son David. The Ellisons are already doing Trump's bidding at CBS by installing right-wing ideologues who are swaying the network's content in favor of this administration in a very, very clear way.
▶ 2:02:16And now they're telling Trump that if Paramount buys Warner Brothers, they'll turn CNN into a Trump news network. Mr. Wood, are you concerned about the possibility of viewpoint discrimination at CNN if Trump blocks the Netflix deal and gives the green light to Paramount? I think you said it well, Congressman.
▶ 2:02:40If if the new owners of CBS want to install a more right-leaning newsroom and change their viewpoint, that's their prerogative. The problem is when they're doing that, not only at the president's request, but with the threat that their merger won't be approved unless they do so. So, that's the really chilling element here. Companies, of course, have a right to change their politics, change their coverage, change their newsrooms, but when it's not only at the government's request, but under threat from the government of withholding of benefits or some other kind of regulatory action. We've seen this at the FCC many times.
▶ 2:03:08Invest investigations launched that sort of magically disappeared once companies made concessions, and that's the kind of interference, not only in the antitrust process, but with the First Amendment, that gravely concerns us. And that's the warning about greater consolidation in the industry. Thank you. I yield back, Mr. Gentleman yields back. Gentleman from New York is recognized for UC request. Thank you, Mr. Chairman. Mr.
▶ 2:03:34Chairman, I ask unanimous consent uh uh to enter into the record uh an article from the Progressive Newswire entitled Press Freedom Groups Tell FCC Media Consolidation Poses Grave Threat to Independent News and Information in the United States. uh I offer you I ask unanimous consent to enter into the record a prepared statement for the record of Cinema United. Without objection. Thank you, Mr. Chairman.
▶ 2:04:02The chairman of the full committee is now recognized for 5 minutes. Thank you, Mr. Chairman. Ms. Melugin, it's about the consumer, right? One hopes so. Yeah, I mean, earlier it was said it's an economic analysis, it's a market analysis. That analysis is driven by the welfare of the consumer. And if you go to any other standard, you start running into problems. You start saying, "Oh, it's about the the the content producers. It's about the unions. It's about the workers. It's the busi- If you go anywhere else, you get in problems. And here's the here's the good thing.
▶ 2:04:32When you focus on the consumer in the long run, it typically benefits the workers, the businesses, the mar- It benefits everyone. But you have to focus there. You get anywhere else, you you can create a monopoly where they hire a bunch more people, pay them huge salaries, but that's not good in the long run for the consumer or, frankly, for the country, for the market, for everything else. Is that right?
▶ 2:04:54Yes, I'd say that antitrust can't serve more than one master, and anytime you any kind of worthy and understandably concerned group, it's a special interest, and that will displace protecting the interests of consumers. there's only one person and there's only one group that it can be focused on, and the great thing about picking consumers is that at some point in the economy, we're all We're all consumers. That's the beauty that standard.
▶ 2:05:19When you deviate from that standard, start playing games, start picking things, start basing it on anything else, I think you run into problems. How's this going to shake out? I mean, that's what you know, I mean, we don't have to predict everything, but tell I mean, how what's the I heard Dr. Dr. Yoon talk about you know, how the marketplace going to be defined and all that. How you guys Give Give us your sense. That's what we all kind of want to know.
▶ 2:05:41Maybe you've said that already. I was in another committee hearing on this Minnesota fraud, so I apologize, but we'll we'll let you we'll let you
▶ 2:05:47a hardy it's a hardy but a newy. Um Yeah, I think um Listen, I agree with what's been said here. Getting that market definition set is going to be hugely important. That affects what market shares we're talking about, and that kind of sets either challengers or these companies up for success, depending. I think it's Any deal that happens is going to be reviewed just because of the size of it. It's going to be reviewed by US antitrust officials, regulators. Um and then you've heard it all here today. What are they going to be looking at?
▶ 2:06:17is going to get the burden? I mean, this again depends on how they define the market, but who's going to have the burden? Is it going to be on the companies, the the merging parties, or is it going to be on the government to show this is anti-competitive? That's sort of that's sort of the fundamental step that takes place relatively early on in this process. Who knows what will happen, but since I got to testify today, I will make the prediction that hopefully we have a more market relevant market definition that takes into consideration the behavior of consumers. And you know, even if you didn't, you're really only kind of hitting that 30%.
▶ 2:06:46So, hopefully we have a broader view of how consumers actually
▶ 2:06:49Even under the narrow definition, you're you're you're you're close to the the kind of the threshold, the 30% criteria, but under the broad definition, no problem. Dr. I see the Dr. shaking his head. Do you want to weigh in as well? Oh, that's 100% accurate. Okay. I get it. Anyone else want I mean, we're going to let the chairman finish up here last, but anything else I I'll even go to the Democrat witness, Mr.
▶ 2:07:13How kind of you, sir. No, I mean, I think, as you said, we want to focus on the consumer, and whether we focus on other things as well.
▶ 2:07:18didn't say the last the last round of questions, you said you got to focus on the worker.
▶ 2:07:22Well, we've talked a lot about the markets, too. I said we can focus on But that's a that's a deviation. That's different. That's changing the that's changing the process. And in the end, in the long run, I don't think that's beneficial. I mean, we I I I want to focus on workers and make sure they have jobs, too, but you can't do that cuz in the long run, it will end up skewing the market. So, you said you were you weren't you weren't uh wedded to the to the welfare of the consumer standard. I think that's the right standard.
▶ 2:07:49Yeah, I think not solely to that, but I certainly understand your viewpoint, too. What I was going to say is I think in antitrust, too, it's always the government's burden.
▶ 2:07:55All I'm saying is your viewpoint's going to get us in trouble, I believe, going forward. The viewpoint focusing on the consumer, as as Ms. Melugin pointed out, because we're all consumers, is the safest, best, tried-and-true process. Okay, I'll keep my I I I said I'd let you talk, so I'll let you talk. Oh, no, I was going to say, I mean, it's it's the government's burden, but as Dr. Yoon explained earlier, there's a presumption of illegality when the concentration levels hit a certain level. So, it's it's In answer In answer to your question, it's not going to be the company's burden to get this through. It's the government's burden to make that case.
▶ 2:08:22That's my read.
▶ 2:08:23But how they make that case will depend greatly on how we draw those market barriers, and we have concerns about about competition here, for sure, but that work is yet to be done. Doctor, you get the last 33 seconds. Uh yeah.
▶ 2:08:37So, [clears throat] I think that if we focus on the narrowest market, which is the subscription video on demand market, uh the concentration level there, even though it's likely more than 30%, the market concentration in that market is not particularly high, And the 30% Philadelphia National Bank threshold Mhm. has zero uh basis in economics.
▶ 2:09:06Uh it's more seen as a necessary condition as a sufficient condition. So, even under that narrow market definition, I don't know if this is a a slam dunk, but there are lots and lots of problems with that narrow market by definition, you know, it's a relevant market. So, whoever defines that market that says that everything else is irrelevant.
▶ 2:09:34And that would include YouTube, and that's just and others, and just not the Chairman, thank you for this important hearing, and you're back. Chairman Neils back. I I just wanted to wrap up, I guess. I'll recognize myself for for 5 minutes, but I I think uh what it comes down to is and what we've heard a little bit today is let's actually think about how real people actually make the decisions on what they're going to
▶ 2:09:58uh use as their uh their entertainment uh value. And I think, you know, if somebody now says that you know, it seems like one of the hotter shows right now is Land Man. So, if your neighbor or your friend says, "Hey, have you seen the last episode of Land Man?" The first thing you're going to think is, "I don't know because what what's it on? What what's it being streamed on?" So, and and then the family makes a decision as to, "Yeah, we're going to sign up for Paramount on Plus cuz we don't have it right now, but I do want to watch Land Man." Okay.
▶ 2:10:30then you have the sports issue, which is you have NFL teams right now that are on five different streaming venues. So, the level of frustration I hear from the constituents back in the fifth district is, "Why are the Packers on Peacock three times this year, you know?" Uh so, I I don't know that the mergers necessarily change that because no one's shopping for the actual network. What they're doing is they're shopping for the content, right?
▶ 2:10:56Uh so, it for my for my perspective, I think the last uh really did not look favorably on mergers, right? I mean, every merger was suspect right out of the gate, and what we found was that that's not always a bad thing. It depends on the market, it depends on the content, and it depends how it's being delivered, and I think that was underscored again today, so. Uh I just want to thank the witnesses for participating today.
▶ 2:11:27And uh yeah, we do have a couple of unanimous consents. Uh an article published in Wall Street Journal authored by myself titled "A Merger Could Bring Better Streaming". I think the ranking member should offer that one on my behalf. Uh an article published in Townhall titled "Netflix Warner Brothers Deal is Free Market". uh an article published in Townhall titled "The Netflix Warner Brothers Deal uh Puts America First", so.
▶ 2:11:57without objection, those will be added. And uh we wel- we we thank everybody for participating today. And uh certainly want to wrap up with um not only uh I think thanking everyone for being here, but just hang on 1 second. Without objection, all members will have 5 legislative days to submit additional written questions for the witnesses and additional materials for the record. Without objection, the hearing is