Show an ad over header. AMP

I am the FIRST

Antitrust regulators begin to skeptically eye media and tech mergers

As media and tech companies look for ways to combine and grow their content footprints, regulators are beginning to eye their efforts with skepticism.

The big picture: Big Tech deals "will probably heighten calls for antitrust legislation," says former Justice Department antitrust chief Makan Delrahim.


Amazon is in final talks to acquire MGM Studios for roughly $9 billion including debt, according to The Wall Street Journal.

  • The deal, which would mark the second-largest acquisition for Amazon, would be a major milestone in the tech sector's push in entertainment.
  • MGM has long been considered a prime acquisition target as one of the last independent media companies not gobbled up by a tech firm or bigger studio.

Lawmakers are taking aim at the deal. "This proposed merger is yet another example of Big Tech’s commitment to total dominance in every sector of our economy," tweeted Republican Congressman Ken Buck, a member of a House Judiciary subcommittee on antitrust issues.

  • "If Congress doesn't act soon, there won’t be a market Big Tech doesn’t control."

Be smart: Amazon isn't likely to face too much regulatory scrutiny, but that doesn't mean the DOJ and other federal agencies won't look at the potential deal.

  • "The Justice Department will take a look at that to see if on the production side — there’s any reduction in competition — and also on the distribution side — if there's any threats of somehow foreclosing (the MGM) content that harms competition," Delrahim says.

The Amazon report follows blockbuster news announced last week that AT&T will spin off WarnerMedia to form a new media behemoth with Discovery.

  • Delrahim argues that the structure of that deal hasn't been fully scrutinized.
  • "They have 71% of (the newly-formed) company," he notes. "They still have control."
  • "Are they going to have a sweetheart deal between that and now the combined company? One way to look at it is that AT&T basically gobbled up Discovery as well, and Scripps, since Discovery bought Scripps."

Between the lines: The WarnerMedia/Discovery will be the first major media deal to be scrutinized by the Biden administration, adding pressure to the situation.

  • "We think the deal ultimately gets approved, either by the DOJ or by the courts but there is some risk of rejection," writes Blair Levin, an analyst at New Street Research.
  • While the companies hope to close the deal by mid-2022, a lawsuit by the DOJ would extend that timeline significantly, Levin notes.
  • The last major media merger to face serious regulatory scrutiny was AT&T's acquisition of Time Warner in 2018. The Justice Department and Delrahim sued to block the deal, but failed.

What to watch: The WarnerMedia/Discovery deal has sparked a frenzy amongst media insiders, who argue a deal this size sets a new precedent for other firms.

  • Reports began to surface about how Comcast CEO Brian Roberts would respond to the tie-up. Media mogul John Malone said in an interview with CNBC there's "no question" Roberts would have loved to acquire Time Warner.
  • Malone noted that there could be a chance to possibly combine the newly-formed Discovery/WarnerMedia entity with NBCUniversal, which is mostly owned by Comcast, “if the regulatory environment permitted."

The bottom line: As content companies get bigger, and as more efforts to combine content assets with distribution assets continue, regulatory analysts say it's likely federal agencies will start to take a closer look at such transactions.

  • “[C]ompanies will probably face a more inherently skeptical set of antitrust regulators than the last time Democrats held power,” says Paul Gallant, a media regulatory analyst with Cowen Washington Research Group.

Why the startup world needs to ditch "unicorns" for "dragons"

When Aileen Lee originally coined the term "unicorn" in late 2013, she was describing the 39 "U.S.-based software companies started since 2003 and valued at over $1 billion by public or private market investors."

Flashback: It got redefined in early 2015 by yours truly and Erin Griffith, in a cover story for Fortune, as any privately-held startup valued at $1 billion or more. At the time, we counted 80 of them.

Keep reading... Show less

Scoop: Facebook's new moves to lower News Feed's political volume

Facebook plans to announce that it will de-emphasize political posts and current events content in the News Feed based on negative user feedback, Axios has learned. It also plans to expand tests to limit the amount of political content that people see in their News Feeds to more countries outside of the U.S.

Why it matters: The changes could reduce traffic to some news publishers, particularly companies that post a lot of political content.

Keep reading... Show less

Scoop: Amazon quietly getting into live audio business

Amazon is investing heavily in a new live audio feature that's similar to other live audio offerings like Clubhouse, Twitter Spaces and Spotify's new live audio platform, sources tell Axios.

Why it matters: As with Amazon's efforts in podcasting and music subscriptions, the company sees live audio as a way to bolster the types of content it can offer through its voice assistant, Alexa, and its smart speaker products.

Keep reading... Show less

Hurricane Ida exposes America's precarious energy infrastructure

The powerful hurricane that plunged New Orleans into darkness for what could be weeks is the latest sign that U.S. power systems are not ready for a warmer, more volatile world.

The big picture: “Our current infrastructure is not adequate when it comes to these kinds of weather extremes,” Joshua Rhodes, a University of Texas energy expert, tells Axios.

Keep reading... Show less

"We must go further": 70% of adults in European Union are fully vaccinated

About 70% of adults in the European Union are fully vaccinated against COVID-19, Ursula von der Leyen, the president of the European Commission, said Tuesday.

Why it matters: The milestone makes the E.U. one of the world's leaders in inoculations, after an initially lagging vaccine campaign, the New York Times notes.

Keep reading... Show less

What Elizabeth Holmes jurors will be asked ahead of fraud trial

Jury selection begins today in USA v. Elizabeth Holmes, with the actual jury trial to get underway on Sept. 8.

Why it matters: Theranos was the biggest fraud in Silicon Valley history, putting both hundreds of millions of dollars and thousands of patients' health at risk.

Keep reading... Show less

Insights

mail-copy

Get Goodhumans in your inbox

Most Read

More Stories