What the Paramount-Warner Brothers merger means for Trump and the media

I'm joined now by the FTC chair under. Joe Biden, Lena Khan. Thanks so much for. joining me. >> Great to be here. >> So, I want to talk about this new merger. that seems all but imminent at this. point. Uh given the fact that Paramount. has bid successfully for Warner Brothers. Discovery, Netflix has dropped out, which means we're going to see a major. uh consolidation in the area of media. yet again. So, can you give a quick. overview on what's happening here? So, for months, we've seen a basically a. form of bidding war uh between Paramount.

and Netflix for these assets. Um, and. it's been pretty clear that the Trump. administration has wanted Paramount to. win out. And yesterday, we just. announced that uh Paramount uh after. making a new bid uh was basically, you. know, resulting in in Netflix backing. out. So, there are some real legal. questions here that remain. uh both the. Netflix and Paramount deal would have. raised major red flags in their own. ways, but given how cozy this. administration is with Paramount and how.

much they seem to want to put the thumb. on the scale, it's not clear that we're. going to see any action from the federal. government when it comes to challenging. a potentially illegal deal. Okay, so. first off, I want to talk about why the. White House is so hellbent on making. sure that Netflix was not a part of. this, that this was just Paramount and. Warner Brothers Discovery. What benefit. does Donald Trump derive from seeing. that merger go through? Well, it's no secret that he's very cozy. with the new owners of Paramount. Um,

the Allison family, which even after. taking over CBS, have seemed. extraordinarily eager and happy to shape. news in a way that's going to benefit. the administration and, you know, effectively chill or or suppress news. that is not. Um, and they've been very. clear that, the administration and the. White House has been very clear that. that's how they want it. Um, and if this. merger were to go through, it would put. CNN alongside CBS in the hands of.

Paramount. And so there would be an. extraordinary risk that we would see. even more consolidation over news during. an administration that has been very. happy to, you know, basically assert. that they expect news channels to play. ball and basically function as ST. What kind of consolidation would we be. looking at in the media space, in the. news space if this goes through? >> I mean, if this goes through, we're. basically going to be seeing the merger.

of two massive companies, media. conglomerates, uh, that each have a. major presence in movie studios and. distribution, uh, major TV studios, uh, sports distributors. And so it would. basically, you know, create, uh, a. merger between two out of the five. biggest media companies. And that's an. extraordinary amount of consolidation. Uh unchecked corporate power is always a. problem, but the risks are especially. acute when we're talking about news and.

media because about concentrating power. over who gets heard, who gets seen, what. news gets amplified, what news gets. suppressed. Um and I think you know the. last year and has been a real testament. to the hazards of allowing so much. concentrated power over the news and the. media uh especially when you have an. administration that is very eager to. basically mold uh the media ecosystem to. their liking. >> In your estimation, is a merger like.

this legal? Are there not antitrust laws. that exist to prevent this kind of. consolidation? >> Uh there absolutely are. And you know, this goes all the way back to uh 1890, 1914 against the backdrop of the. industrial trusts where lawmakers were. extraordinarily concerned about uncheck. consolidation and what it would mean for. consumers, workers, but also the. citizenry uh and the recognition that if. we what we really want is a democracy.

where people have real freedom, you need. checks not just against arbitrary state. power, but also checks against. unfettered corporate power. And that's. really what the antitrust laws were. about. What we've seen during this. administration, be it an antitrust or. all sorts of other legal areas, though, is a real eagerness to basically have. two systems of law enforcement. Uh if. you're a friend of the administration, um you know, you're going to get. basically white glove treatment and a.

suspension of the laws often times. Uh. and for everybody else, you know, they're they're willing to to play hard. ball. And so I think what we have seen. is just a system of continued elite. impunity uh and the weaponization of the. antitrust laws effectively to to reward. friends and and punish enemies. >> I guess the the question everyone's. asking here is is there any way for any. of this to be undone once this merger. takes effect and they actually go. through with it. If a less cozy.

administration um takes power, is there. some way to revisit this or is it like. once the toothpaste is out of the tube, that's it? >> I mean, there are a few avenues here. First, I should say it's not only the. Trump administration that is in the. position of basically uh potentially. stopping or greenlighting this deal. uh. state attorneys general also have the. authority to enforce the antitrust laws. and at various points in in the past. they have sued to block mergers. Uh. attorney general Rob Bont of California.

yesterday put out a note saying uh this. is nowhere near a done deal uh and that. his office is investigating it and will. be taking extraordinarily seriously uh. any legal concerns that they see. So. there is a possibility that uh AG Bont. potentially teaming up with other state. attorneys general could actually sue to. try to stop this deal. Now um if it does. in fact end up going through there is an. opportunity for a future administration.

to revisit it and sue to undo the merger. effectively. >> What could this mean for consumers? I. know you spoke a little bit about you. know the media landscape. Obviously we. consume all of that so that has an. impact. So, can you talk about all of. the impacts that regular Americans might. feel as the result of this kind of a. merger? >> Yeah, I mean, look, the most immediate. impact could be, you know, higher prices. for for pay TV effectively, you know, concentrating more pricing power. There's also. >> and and by the way, we've seen that like.

everybody watching here has watched the. price of every single cable service that. we all subscribe to go up every single. year by three, four, five, $6 and it's. just it's it it feels relentless at this. point. So I'm I'm certain to your exact. point that that consolidating you know. two of these the biggest studios in. Hollywood would not make things more. equitable. It would only you know allow. them to write to to increase costs even. more without any recourse. >> Totally. Um, it would also give the new. company an enormous amount of leverage.

over Hollywood writers, um, and make it. much more difficult, uh, if you're a. writer or somebody who who works in. Hollywood, uh, to really get fair. compensation for your work, uh, or even. have more outlets to kind of be, you. know, pitching, uh, your ideas to. And. so there's going to be an effect on. consumers, but there's also going to be. effect on creators and producers and the. people who rely on these enormous. middlemen um to actually reach Americans. and get their creations and their ideas.

out to the market. Um there also could. be uh you know real risk when it comes. to democracy, right? I mean, we've been. talking about how concentrated control. uh over the media landscape just creates. a much more fragile democracy when it. comes to, you know, who is controlling. what information gets heard. Um, at its. best, a free press is supposed to hold. power to account. And instead, if these. assets are owned by people uh who are.

eager to, you know, bend the knee to an. administration, uh it could further warp. and distort just how information is. reaching Americans. Um beyond that, I. think it really highlights just the. continued risk of uh weaponization of. law enforcement. Um it's been really. great to see more and more members of. Congress speak out about that. Uh we've. seen, you know, statements from people. like Senator Ggo, from Senator Murphy, from Senator Warren noting that this. real dissent into payforplay law.

enforcement is not something that can go. forward without any accountability. Um. and that for the CEOs and companies that. are making decisions to basically play. ball in this corrupt environment and. basically use the cronyism to their. advantage. We're now hearing more. members of Congress say we're not going. to forget. And you know, if this is a. country that is serious about the rule. of law, this is something that we're. going to have to investigate uh whenever.

we're back in power. >> What do you think is is an appropriate. longer term solution? because I feel. like whenever Democrats are in power in. including you know yourself at the FTC. and and you were the the the gold. standard in terms of making sure that. that these antitrust laws were uh were. followed like that's good while we're in. power but the moment we're not we see. all of these mergers and acquisitions. and consolidation which uh not only. makes uh the news products for example.

if we're talking about that um less. effective and less equitable. and less fair. Um, but it also makes it. worse for consumers because now you have. less variety to choose from. But as as. soon as these Republicans take control, those go through. And so we're always. just, you know, where the asymmetry here. between the two sides is just so. apparent where, you know, only while. we're in power are these antitrust laws. followed. But then as soon as. Republicans take control, we're seeing. all of these M&As, we're seeing all of.

these mergers and consolidation. And so. often times there's no way to unwind. them once they once they go through. And. so this it doesn't feel like a. sustainable process here because because. it's, you know, it's going to bounce. back and forth, but only one side is. actually following the rules. And so. there's going to come a point where the. Larry Ellison's and David Ellison's are. controlling everything, which they are. right now. And our only hope is like. maybe we can investigate this and and. roll it back to some degree if Democrats. take power. But like the likelihood is.

obviously low. Um and so what is a. longer term solution? Have you thought. about that at all? >> I mean the first thing we need is a. recognition that this type of. consolidation and decisions about. mergers are not just some technocratic. thing that happens. It is actually. intimately connected to real questions. of affordability and economic power. And. in as much as Democrats are governing in. a way that is about holding corporate.

power to account and making sure that. companies are not ripping off Americans, um that is something that they need to. talk about, right? And and I think we've. seen uh various elections over the last. year uh that people are really hungry. for elected officials and a government. that is showing it's willing to fight. for them even when it means standing up. to to corporate interests and to. powerful corporations. Um, you know, we. have these government agencies that are. charged with doing their job when. they're MIA. Uh, we need to be relying.

more on state attorneys general. Um, but. also the public. I mean, there is what's. known as a private right of action. Um, you know, uh, writers in Hollywood could. band together and sue to try to block. this merger. And so, it's not kind of an. all or nothing. We're exclusively. dependent on the federal government. um. there are actually many more actors that. can get activated and and actually do. something here. >> Is this a situation where we'd even be. able to look at unions like WGA, the.

Writer Guild, or SAG, Screen Actors. Guild, um who can use their collective. bargaining power to push back against. the consolidation of these studios. because those are the people that. they're going to be uh uh bargaining. with or against. And so, you know, if. we're looking for some group that has. standing, clearly those those uh those. unions would be it. >> Yeah, absolutely. I mean, you know, those are groups that have in the past. shown courage and and speaking up. against consolidation and and various. types of mergers. Um, when I was heading. up the FTC, you know, we would.

oftentimes hear from the writer guild, for example, that would be able to. pinpoint merger after merger that had. resulted in higher prices for consumers, but also markets that were more making. it more difficult for writers and actors. and producers to actually get a fair. shake and were resulting in an industry. that was just much more impoverished, much less rich, had much fewer options. Um, you know, this is, uh, long been.

just a huge point of pride for America. Uh, and the idea that we would allow. consolidation to really lower the. quality and the diversity and just the. richness of our media sector, um, is. something that we can't forget either. >> Is there some legislation um, that would. allow some changes that you'd like to. see uh, get codified? Like what what. would that look like um, in your ideal. scenario? I mean, >> so so that it doesn't feel like we're. just playing catch-up or relying on.

desperate actors to sue and stop bad. things from happening, like is there. some proactive approach we can take. where we actually codify some law so. that, you know, so that we're not just. playing catch-up? >> Yeah. I mean, I think in the media. industry, you know, there were eras. where we had strict rules against what's. known as as vertical integration. And so. there was basically a rule that said uh. if you're in the business of creating. content, you cannot then also control. the pipes that let you determine what is.

reaching people. And those types of, you. know, breakup rules or or rules that are. limiting integration is something that. just used to be part and parcel of how. we structured markets uh especially in. areas like media. And so I think that's. something that we need to be revisiting. Um there have been discussions about. doing that in the healthc care context. and and you know whether we need to be. breaking up these conglomerates and some. more proposals that are being. introduced. I think we need a similar. conversation in the media ecosystem.

about whether this type of vertical. integration just creates way too much. concentrated power and also creates. conflicts of interests uh where where. the companies that are you know. controlling the production uh of content. are then also getting to call the shots. about what is reaching people. And so. that would be one type of rule that I. think could be helpful. Um, beyond that, you know, there are rules that would. make it less expensive to enforce the. antitrust laws. Um, you know, this is a. little bit in the weeds, but it is so so.

so expensive these days to bring a. single merger challenge. Uh, sometimes. it can cost millions and millions of. dollars just in fees to outside experts. And that's something that can also make. it more difficult for everyday citizens. or even state AGs uh to be enforcing the. law when they see illegal mergers. And. so that's something that Congress could. take action on as well. >> Well, as always, Lena, I appreciate the. time. Uh, as I mentioned before, you are. the gold standard when it comes to all. of this stuff. So, I I appreciate you.

taking a little bit of time to talk to. me today. >> Thanks so much for having me. [music].