Months before the Justice Department blessed the Warner Bros. merger. $43 billion Discovery, 30 members of Congress warned the agency in a letter that the resulting competitive void could allow the newly formed giant to ignore what consumers want. Among the antitrust concerns they voiced was that it could stifle diverse and inclusive programming — something that became a common criticism after WBD canned its $90 million HBO Max movie. bat girl, the first DC movie directed by a Latina, Leslie Grace.
“There was no indication with bat girl that they’re going to shop it,” said Rep. Joaquin Castro, D-Texas. The Hollywood Reporter. “So this incredibly talented Latina actress and this wonderful story is thrown in the trash for a tax deduction.”
In the four months since the deal was closed, CEO David Zaslav has revamped the entertainment powerhouse. During an Aug. 4 earnings call, he trumpeted a 10-year plan for DC and a “reset” that involved a shelving. bat girl – as part of a reduction in costs and a return to the creation of projects for theatres. “It’s not about how much,” Zaslav said, talking about their content offerings. “That’s how good it is.”
The message was clear: bat girl doesn’t live up to Warners’ new standards for theatrical release and has no place in its streaming plans. (Blue Beetle, starring Xolo Maridueña as DC’s first Latino superhero, in December was slated to hit theaters in August 2023 after originally coming to HBO Max.) Scoob! : The holiday haunt, wonder twins and JJ Abrams’ big-budget sci-fi drama Demimonde — to help pay off more than $50 billion in debt he racked up to get the deal done.
Experts wonder if the moves indicate the newly merged company has too much market power under antitrust laws, which seek to promote product innovation, choice and variety. Merger officials are considering whether a deal will cause a company to “retire a product that a significant number of customers strongly prefer,” according to DOJ and FTC guidelines. “You have to ask whether this combined entity has enough market share to act unilaterally on traditional parameters of competition, like price and output,” says Jonathan Barnett, a USC law professor. “You would be concerned about some of the post-closure actions.”
Castro agrees that the company’s plans to cut content spending raise antitrust concerns, observing that there have “already been significant cuts across the company and they are planning more.” He also notes that the prospect of seeing a long-running project killed off for tax purposes will scare off talent. “I don’t know if that was the best way for David Zaslav and his new team to introduce themselves to Hollywood,” he says. “I don’t see people wanting to do business with them.”
WBD’s reputation with creators and viewers has indeed taken a hit. “It’s hard not to feel like she’s a role model,” says Chronicles of Gordita showrunner Brig Muñoz-Liebowitz. Her HBO Max series about a 12-year-old Dominican girl (Oliva Goncalves) in 1980s Miami adjusting to life in the US was also canceled – despite critical acclaim and popularity. The series was the seventh-most-watched comedy among all comedies released in 2022, according to analytics outlet Whip Media. Muñoz-Liebowitz adds, “I think they would want to honor the commitments they’ve made in their future decision-making and not alienate the consumers they have.”
WBD, which declined to comment for this story, said the move was inspired by a strategic shift away from live children’s and family programming — despite the show not being listed in the “family” category on HBO Max, only “Latino”. ”
With decisions to put aside bat girl and transmit a second season of Chronicles of Gordita, Warner Bros. Discovery may be glossing over the importance of the Latinx community – a vastly underrepresented group in Hollywood. Even though Latinos make up about 19% of the country, they make up just 6% of roles, according to a 2021 UCLA diversity report. cost-cutting measures that have historically excluded marginalized communities,” said Rafael Agustín, CEO of the Latino Film Institute. “They assume they’re doing whatever it takes for their bottom line, not realizing how much failure to invest in diversity and inclusion today will hurt their business in the future. .”
HBO Max’s offerings are as well known for their cultural diversity as they are for their quality and ambition. Some of the streamer’s stickiest content has been facilitated through partnerships with Japanese animation house Studio Ghibli and Crunchyroll, which specializes in anime distribution. (HBO’s licensing agreement with Crunchyroll expired in January.) But the goodwill and competitive advantage that comes from adopting a large collection of titles across multiple genres, like Insecure, A dark lady sketch show and Studio Ghibli Taken away as if by magic, can now erode. “It looks like self-harm, to be honest,” observes Muñoz-Liebowitz. “Let’s say you were a fast food restaurant and you had a very popular menu item. If purchased by another company, would you dispose of the item? It doesn’t make sense to get rid of something popular just because you’re making a business change.
In addition to the content itself, another indicator of whether Warner Bros. Discovery breaches merger guidelines is what the newly merged entity ends up charging for a combined HBO Max/Discovery+ service when it launches in 2023. Under antitrust law, an acquisition’s effect on price is the most important factor in evaluating a merger. It’s worth watching the aftermath of AT&T’s purchase of WarnerMedia before the Texas phone giant abandoned its entertainment ambitions. Less than two years after the Justice Department’s failed efforts to block the deal — the agency’s first challenge to a vertical merger in 40 years — AT&T has hiked DirecTV’s prices even though it promised over the course of its legal battle to reduce bills after the merger.
HBO Max is one of the more expensive streaming platforms at $14.99 per month, and it remains to be seen what consumer appetite is for a price hike to add Discovery+ deals. There may not be much overlap in demand for content between the two platforms. The company itself said on its quarterly earnings call that HBO Max skews men, specializes in scripted content and dating viewing, and is the “home of fandoms,” while Discovery+ skews women, focuses on unscripted programming and viewing comfort, and is the “home of genredoms. Viewers might revolt if Zaslav misinterprets the synergies offered by marrying HBO Max and Discovery+ into one service. “When there is consolidation and only a few companies control the market, they become more monopolistic,” says Castro. “There’s a greater chance that they’ll be able to raise prices for consumers and limit selection.”
A version of this story first appeared in the August 17 issue of The Hollywood Reporter magazine. Click here to subscribe.