Warner Bros. Discovery called out for scrapping Latino programs, CNN cuts post-merger
Four Democrats in Congress have asked the U.S. Department of Justice to review the Warner Bros. Discovery merger, alleging the deal is responsible for “hollowing out an iconic American studio.”
In a letter Friday to Atty. Gen. Merrick Garland and Assistant Atty. Gen. Jonathan Kanter, the lawmakers cited “harm” caused by last year’s union of the two media companies, which prompted layoffs of thousands of employees in Los Angeles, New York and Atlanta.
Opportunities for Latinos and other artists have been reduced because the merger “heightened barriers to entry in the media and entertainment industry,” the lawmakers wrote.
Warner Bros. Discovery has wiped out hundreds of millions of dollars in programming in recent months, projects that provided jobs for hundreds of workers. The studio canceled the $90-million movie “Batgirl” in order to qualify for tax benefits. The film was to feature the first Latina superhero in the DC Comics franchise.
The company also dumped an upbeat HBO Max comedy series with a Latino cast, “Gordita Chronicles,” after only about a month on TV.
Saturday marks the one-year anniversary of AT&T’s $43-billion consolidation of its WarnerMedia with cable programming firm Discovery. The transaction minted a larger media giant, but it also saddled Warner Bros. Discovery with more than $50 billion in debt. Since then, the company has been struggling to control its huge debt load and has prioritized cost-cutting.
“There have been massive layoffs. Content creators, in many cases, have been hurt,” Rep. Joaquin Castro (D-Texas) said in an interview. “And some consumers are holding on to TV and streaming subscriptions that feature less content than a year ago.”
Castro was joined by Sen. Elizabeth Warren (D-Mass.), Rep. David Cicilline (D-R.I.) and Rep. Pramila Jayapal (D-Wash.) in sending the letter that asks the DOJ “to investigate the state of competition in affected labor and consumer markets following the consummation of this merger, which appears to have enabled Warner Bros. Discovery to adopt potentially anticompetitive practices.”
Rep. Joaquin Castro wants to rethink film subsidies if studios don’t improve Latino representation: “We cannot subsidize our own exclusion.”
A Warner Bros. Discovery spokesperson declined to comment.
Despite the criticism from high-profile members of Congress, it would be highly unusual for the DOJ to try to unwind a merger that already received the blessing of regulators.
At the least, Castro said the DOJ, which is currently reviewing how best to modernize and enforce antitrust laws, should look at the Warner Bros. Discovery merger as an example of why some deals should not be approved.
“It isn’t done too often, but there are some actions here that are also somewhat unprecedented,” the Texas lawmaker said, citing Warner Bros. Discovery’s controversial decision to jettison “Batgirl” after filming was complete and the project was in postproduction.
The decision to kill the movie stunned Hollywood insiders. Dumping a film after shooting is completed, especially one with such a high profile, is exceedingly rare. Choosing to not release a film the size of “Batgirl” meant the company had to eat substantial costs. Warner Bros. Discovery executives said privately that the film did not perform well for test audiences.
“For the sake of a tax write-off, because the company is carrying so much debt as a result of the merger, they canceled it,” Castro said. “If there had been no merger, that movie would have ended up going to theaters and on the streaming platforms.”
Earlier this year, the chief executive of DC Studios, Peter Safran, said that there were “a lot of incredibly talented people in front of and behind the camera in that film, but [it] was not releasable.”
A Justice Department spokesperson on Friday confirmed the department received the letter but declined further comment.
Warner Bros. Discovery is looking for $3 billion in cost savings after taking over the legendary entertainment giant from former owner AT&T.
Over the last few years, Castro has emerged as one of the strongest voices for increasing diversity in U.S. media. After the 2019 mass shooting at a Walmart in El Paso, in which 23 people were killed and dozens of others injured, the San Antonio congressman has looked closely at Hollywood’s portrayal of Latinos because of a recognition that people’s attitudes toward others can be shaped by media consumption.
Warner Bros. Discovery Chief Executive David Zaslav, in the run-up to the merger, touted to Wall Street that his team would find $3 billion in annual cost savings after the merger.
Last fall, Warner Bros. Television canceled its writers and directors workshops amid cost-cutting. However, the company reversed the move after protests that it was axing one of the few programs that nurtured diverse talent. The program was shifted from the TV studio to its Diversity, Equity and Inclusion unit.
Warner Bros. Discovery pointed to projects that feature Latinos in prominent roles, including the upcoming comic-book movie “Blue Beetle,” directed by Angel Manuel Soto and starring Xolo Maridueña, who will become the first Latino superhero in the DC universe.
And HBO acquired Cecilia Aldarondo’s documentary “You Were My First Boyfriend,” which debuted at the SXSW Film Festival in March.
In the letter, the lawmakers also pointed to CNN cuts, which eliminated hundreds of jobs at the cable news network.
“WBD is trying to sustain its entertainment business at the expense of news and journalism,” the lawmakers wrote.
Zaslav’s first move after the merger was to close the nascent CNN+ streaming service. His team also dismantled CNN’s documentary film unit, which had been an important stop for film producers.
Other media companies, including Walt Disney Co., have been cutting thousands of jobs as Wall Street has become worried about the high cost of launching successful streaming services.
After thousands of layoffs, stock woes and program cancelations, Warner Bros. Discovery has created a $27-million bonus pool for top executives and also increased incentive awards for its chief executive, David Zaslav.
The four lawmakers have spoken out about the Warner Bros. Discovery deal before.
They led a group of more than 30 lawmakers who raised concerns about the proposed merger in late 2021, four months before the merger was complete.
At the time, the group told Garland and Kanter, who oversees the antitrust division, that the union of the two companies “raises significant antitrust concerns.” They questioned the fate of such legendary properties as CNN, HBO and the Warner Bros. film and TV studio.
AT&T and Zaslav have long maintained the deal was not anticompetitive because Discovery was much smaller than WarnerMedia, and the combination of the two companies did not reduce the number of Hollywood studios because Discovery did not own its own movie studio before. Discovery owned such channels as Animal Planet, Investigation Discovery, TLC, Food Network and HGTV.
“We have stayed on top of the results and consequences of the Warner Bros. Discovery merger, and have been quite disappointed because a lot of the things that we feared have come true,” Castro said.
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