“Full Stream Ahead: Competition and Consumer Choice in Digital Streaming”

1[House Hearing, 119 Congress]2[From the U.S. Government Publishing Office]34                   FULL STREAM AHEAD: COMPETITION AND5                  CONSUMER CHOICE IN DIGITAL STREAMING67=======================================================================89                                HEARING1011                               BEFORE THE1213   SUBCOMMITTEE ON THE ADMINISTRATIVE STATE, REGULATORY REFORM, AND14                               ANTITRUST1516                       COMMITTEE ON THE JUDICIARY1718                     U.S. HOUSE OF REPRESENTATIVES1920                    ONE HUNDRED NINETEENTH CONGRESS2122                             SECOND SESSION2324                               __________2526                       WEDNESDAY, JANUARY 7, 20262728                               __________2930                           Serial No. 119-483132                               __________3334         Printed for the use of the Committee on the Judiciary3536               [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]3738               Available via: http://judiciary.house.gov3940                              ______4142                 U.S. GOVERNMENT PUBLISHING OFFICE434462-503                   WASHINGTON : 20264546                       COMMITTEE ON THE JUDICIARY4748                        JIM JORDAN, Ohio, Chair4950DARRELL ISSA, California             JAMIE RASKIN, Maryland, Ranking51ANDY BIGGS, Arizona                      Member52TOM McCLINTOCK, California           JERROLD NADLER, New York53THOMAS P. TIFFANY, Wisconsin         ZOE LOFGREN, California54THOMAS MASSIE, Kentucky              STEVE COHEN, Tennessee55CHIP ROY, Texas                      HENRY C. ``HANK'' JOHNSON, Jr.,56SCOTT FITZGERALD, Wisconsin              Georgia57BEN CLINE, Virginia                  ERIC SWALWELL, California58LANCE GOODEN, Texas                  TED LIEU, California59JEFFERSON VAN DREW, New Jersey       PRAMILA JAYAPAL, Washington60TROY E. NEHLS, Texas                 J. LUIS CORREA, California61BARRY MOORE, Alabama                 MARY GAY SCANLON, Pennsylvania62KEVIN KILEY, California              JOE NEGUSE, Colorado63HARRIET M. HAGEMAN, Wyoming          LUCY McBATH, Georgia64LAUREL M. LEE, Florida               DEBORAH K. ROSS, North Carolina65WESLEY HUNT, Texas                   BECCA BALINT, Vermont66RUSSELL FRY, South Carolina          JESUS G. ``CHUY'' GARCIA, Illinois67GLENN GROTHMAN, Wisconsin            SYDNEY KAMLAGER-DOVE, California68BRAD KNOTT, North Carolina           JARED MOSKOWITZ, Florida69MARK HARRIS, North Carolina          DANIEL S. GOLDMAN, New York70ROBERT F. ONDER, Jr., Missouri       JASMINE CROCKETT, Texas71DEREK SCHMIDT, Kansas72BRANDON GILL, Texas73MICHAEL BAUMGARTNER, Washington74                                 ------7576               SUBCOMMITTEE ON THE ADMINISTRATIVE STATE,77                    REGULATORY REFORM, AND ANTITRUST7879                   SCOTT FITZGERALD, Wisconsin, Chair8081DARRELL ISSA, California             JERROLD NADLER, New York, Ranking82BEN CLINE, Virginia                      Member83LANCE GOODEN, Texas                  J. LUIS CORREA, California84HARRIET HAGEMAN, Wyoming             BECCA BALINT, Vermont85MARK HARRIS, North Carolina          JESUS G. ``CHUY'' GARCIA, Illinois86DEREK SCHMIDT, Kansas                ZOE LOFGREN, California87MICHAEL BAUMGARTNER, Washington      HENRY C. ``HANK'' JOHNSON, Jr.,88                                         Georgia8990               CHRISTOPHER HIXON, Majority Staff Director91                ARTHUR EWENCZYK, Minority Staff Director9293                            C O N T E N T S9495                              ----------9697                       Wednesday, January 7, 20269899                           OPENING STATEMENTS100101                                                                   Page102The Honorable Scott Fitzgerald, Chair of the Subcommittee on the103  Administrative State, Regulatory Reform, and Antitrust from the104  State of Wisconsin.............................................     1105The Honorable Jerrold Nadler, Ranking Member of the Subcommittee106  on the Administrative State, Regulatory Reform, and Antitrust107  from the State of New York.....................................     3108The Honorable Jamie Raskin, Ranking Member of the Committee on109  the Judiciary from the State of Maryland.......................     6110111                               WITNESSES112113Jay Ezrielev, Founder, Managing Principal, Elevecon, LLC114  Oral Testimony.................................................     9115  Prepared Testimony.............................................    11116Jessica Melugin, Director, Center for Technology & Innovation,117  Competitive Enterprise Institute118  Oral Testimony.................................................    16119  Prepared Testimony.............................................    18120John M. Yun, Professor of Law, Antonin Scalia Law School, George121  Mason University122  Oral Testimony.................................................    21123  Prepared Testimony.............................................    23124Matthew F. Wood, Vice President, Policy and General Counsel, Free125  Press126  Oral Testimony.................................................    39127  Prepared Testimony.............................................    41128129          LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING130131All materials submitted for the record by the Subcommittee on the132  Administrative State, Regulatory Reform, and Antitrust are133  listed below...................................................    78134135Materials submitted by the Honorable Jerrold Nadler, Ranking136  Member of the Subcommittee on the Administrative State,137  Regulatory Reform, and Antitrust from the State of New York,138  for the record139    A statement entitled, ``IDA Statement Opposing A Merger140        Involving Warner Bros. Discovery,'' Oct. 29, 2025,141        International Documentary Association (IDA)142    A press release entitled, ``DGA Statement on Warner Bros.143        Discovery/Netflix,'' Dec. 5, 2025, Directors Guild of144        America145    A statement entitled, ``SAG-AFTRA Statement Regarding146        Proposed Netflix/Warner Bros. Transaction,'' Dec. 5,147        2025, Screen Actors Guild-American Federation of148        Television and Radio Artists (SAG-AFTRA)149    A statement entitled, ``The Warner Bros. Acquisition Is a150        Threat to Workers, Consumers, and American Culture--It151        Must Be Blocked,'' Jan. 7, 2026, Writers Guild of America152        West and Writers Guild of America East153    An article entitled, ``Hollywood Teamsters: Warner-Netflix154        Geal Is `Another Call for Alarm' for Entertainment155        Workers,'' Dec. 5, 2025, The Wrap156    A statement from the Producers Guild of America, Jan. 6, 2026157    A statement from the American Economic Liberties Project,158        Jan. 7, 2026159    An article entitled, ``The Warner Bros. Curse,'' Dec. 16,160        2025, Planet Money, NPR161    An article entitled, ``There are no good outcomes for the162        Warmer Bros. sale,'' Dec. 10, 2025, The Verges163    A report entitled, ``A More Perfect Media: Saving America's164        Fourth Estate from Billionaires, Broligarchy and Trump,''165        Jul. 14, 2025, Free Press166    A press release entitled, ``Press Freedom Groups Tell FCC:167        Media Consolidation Poses Grave Threat to Independent168        News and Information in the United States,'' Aug. 5,169        2025, Free Press170A statement from Cinema United, Jan. 7, 2026, submitted by the171  Honorable Derek Schmidt, a Member of the Subcommittee on the172  Administrative State, Regulatory Reform, and Antitrust from the173  State of Kansas, and the Honorable Jerrold Nadler, Ranking174  Member of the Subcommittee on the Administrative State,175  Regulatory Reform, and Antitrust from the State of New York,176  for the record177Materials submitted by the Honorable Becca Balint, a Member of178  the Subcommittee on the Administrative State, Regulatory179  Reform, and Antitrust from the State of Vermont, for the record180    An article entitled, ``Movie Theatres Dread Any Warner Bros.181        Merger, Fear `Tipping Point' Where While System182        `rumbles,' '' The Hollywood Reporter183    An article entitled, ``Gen Z Went to Movies the Most Often in184        2025,'' Dec. 17, 2025, Indie Wire185A statement from Makan Delrahim, Chief Legal Officer, Paramount186  Skydance Corporation, Jan. 7, 2026, submitted by the Honorable187  Jim Jordan, Chair of the Committee on the Judiciary from the188  State of Ohio, for the record189Materials submitted by the Honorable Scott Fitzgerald, Chair of190  the Subcommittee on the Administrative State, Regulatory191  Reform, and Antitrust from the State of Wisconsin, for the192  record193    An article entitled, ``A Merger Could Bring Better194        Streaming,'' Dec. 14, 2025, The Wall Street Journal195    An article entitled, ``Netflix-Warner Bros. Deal Is Free196        Market David Slaying Hollywood's Outdated, Greedy197        Goliath,'' Jan. 3, 2026, Townhall198    An article entitled, ``The Netflix-Warner Brothers Deal Puts199        America First,'' Jan. 5, 2026, Townhall200201                                APPENDIX202203A statement from Dr. Courtney Radsch, Director, Center for204  Journalism & Liberty, Jan. 7, 2026, submitted by the Honorable205  Jerrold Nadler, Ranking Member of the Subcommittee on the206  Administrative State, Regulatory Reform, and Antitrust from the207  State of New York, for the record208209                QUESTIONS AND RESPONSES FOR THEE RECORD210211Questions submitted by the Honorable Scott Fitzgerald, Chair of212  the Subcommittee on the Administrative State, Regulatory213  Reform, and Antitrust from the State of Wisconsin, for the214  record215  Questions for Jessica Melugin, Director, Center for Technology216      & Innovation, Competitive Enterprise Institute217    Response from Jessica Melugin, Director, Center for218        Technology & Innovation, Competitive Enterprise Institute219  Questions for Jay Ezrielev, Founder, Managing Principal,220      Elevecon, LLC221    Response from Jay Ezrielev, Founder, Managing Principal,222        Elevecon, LLC223  Questions for John M. Yun, Professor of Law, Antonin Scalia Law224      School, George Mason University225    Response from John M. Yun, Professor of Law, Antonin Scalia226        Law School, George Mason University227Questions for Matthew F. Wood, Vice President, Policy and General228  Counsel, Free Press, submitted by the Honorable Jerrold Nadler,229  Ranking Member of the Subcommittee on the Administrative State,230  Regulatory Reform, and Antitrust from the State of New York,231  for the record232    Response from Matthew F. Wood, Vice President, Policy and233        General Counsel, Free Press234235                   FULL STREAM AHEAD: COMPETITION AND236                  CONSUMER CHOICE IN DIGITAL STREAMING237238                              ----------239240                       Wednesday, January 7, 2026241242                        House of Representatives243244               Subcommittee on the Administrative State,245246                    Regulatory Reform, and Antitrust247248                       Committee on the Judiciary249250                             Washington, DC251252    The Subcommittee met, pursuant to notice, at 10:05 a.m., in253Room 2141, Rayburn House Office Building, the Hon. Scott254Fitzgerald [Chair of the Subcommittee] presiding.255    Present: Representatives Fitzgerald, Jordan, Issa, Cline,256Gooden, Hageman, Harris, Baumgartner, Nadler, Raskin, Correa,257Balint, Garcia, Lofgren, and Johnson.258    Mr. Fitzgerald. The Subcommittee will come to order.259Without objection, the Chair is authorized to declare a recess260at any time.261    We welcome everyone to today's hearing on ``Competition and262Consumer Choice in Digital Streaming.'' I will recognize myself263for an opening statement. Before, I know the witnesses are264aware and I think the Members are, we have a briefing on265Venezuela at 11:30, so we're going to kind of see how things266flow and how we move here today, and, depending on that--I know267there are some Members that absolutely want to attend that, so268we'll just keep that in mind as we move through this.269    For much of the 20th century, film distribution was270dominated by theatrical release. The golden age of Hollywood271saw the rise of movie stars in Blockbuster hits that drew272millions to the box office. The creation of television in the2731950s introduced a new and innovative way to consume media.274    What was initially seen as a threat to the film industry275instead became one of its greatest synergies. Studios began276licensing films for TV broadcast, and the advent of the VHS277tape and DVD player opened up an additional revenue extreme for278direct consumer video sales.279    The emergence of digital technology and broadband internet280fundamentally disrupted this model and, with it, the dominant281players. In the year 2000, only 1 percent of households had282broadband internet capability and that capability of delivering283high-quality videos online. By 2023, that number reached 80284percent of U.S. households.285    Streaming platforms eliminated the need for theatrical286releases and physical distribution, which we know was troubling287to the industry. Instead of relying on theater chains, our288video sales content could be delivered directly to consumers on289demand. This shift lowered barriers to entry and enabled the290new competitors to challenge traditional studios on a global291scale. The result, as we're seeing today, is studios that did292not exist in Hollywood's golden age, acquiring the ones that293did.294    The injection of disruptors has also forced legacy studios295to adapt to that. Netflix's introduction of the first streaming296only model in 2010 forced Paramount, Disney, Warner Brothers,297and others to develop their own platforms. Fifteen years later,298nearly all major film and TV studios have their own streaming299platforms.300    Today, digital streaming is a primary method for consumers301to use and to develop access to TV and other media content.302According to a 2025 Nielsen report, streaming represented303nearly 47 percent of total TV usage and, for the first time304ever, outpaced the combined share of broadcast and cable. As305more content becomes fractionalized across multiple streaming306services, consumers are growing frustrated.307    Separate, Nielsen's survey found that 46 percent of308streaming viewers are finding it difficult to find the content309they want to watch because of too many services.310    A survey by the Motley Fool found that the number is even311higher with 62 percent of subscribers surveyed believing there312are too many options. This is particularly acute in sports313broadcasting. Fans who want to watch their favorite sports314teams are now having to subscribe to multiple streaming315platforms to access each game. This frustration is driven in316large part by increased prices.317    According to The Wall Street Journal, since 2019, prices318for the top streaming services have risen an average of 87319percent. Disney Plus, Apple TV, and NBC Peacock have all seen320price increases of more than 100 percent since their creation.321Households who subscribe to an average of four streaming322platforms are quickly seeing their monthly streaming bills323equal or surpassing their monthly cable bill.324    As consumer demand for streaming continues to rise,325platforms must compete for viewers by offering high-quality326content. Netflix, Apple, and Amazon, for example, have made327significant investments in movie studios to deliver328Blockbuster-level movies and award-winning TV straight to329consumers, and it appears to be working. Netflix has 18 Oscar330nominations in 2025, and Apple TV Pluribus just became the most331watched show in the streaming studio's history, but that332content does not come without a cost.333    To make a Blockbuster film will now cost the studio more334than $200 million. A high-end TV show could easily exceed $10335million per episode. Pluribus cost Apple TV a reported $15336million an episode. As a result, many of these companies337operate with negative profit margins for several years before338achieving profitability. Netflix is the only platform to339maintain consistent profitability since 2022.340    In other words, the barrier to sustaining a competitive341streaming service is high. It's no surprise then that many of342these companies are choosing to buy rather than build their own343content. Disney, for example, acquired 20th Century Fox in3442019. Amazon acquired MGM Studios in 2022. Most recently,345Netflix announced an agreement to acquire Warner Brothers346Studio. This deal, one of the largest of 2025, would combine347two of the top four streaming services by global subscriber348count. As expected, the reactions to this merger have been349mixed.350    Let me be clear. This hearing is not about picking winners351or losers in the merger context. This is for Warner Brothers352shareholders. Today, we're here to start a much-needed353conversation about whether further consolidation in the354streaming industry would be helpful or harmful to consumers.355    Economic theory teaches us that mergers create356efficiencies, and that's no different when it comes to the357streaming industry. By vertically integrating content358production and distribution, platforms can eliminate and also359work on lowering redundancies and focus on delivering high-360quality content to consumers at lower prices.361    Some will argue that eliminating arrival will hurt362competition or further entrench a dominant player. Others may363say it will harm our already distressed theatrical film364industry. We should take all those concerns very seriously.365    I would remind colleagues that the antitrust law is meant366to protect consumers by promoting competition, and any367potential harm should always be weighed against consumer368benefit. A merger that results in greater choice in video369libraries at lower prices is welcomed.370    While delivering to consumers a solution to their current371frustration with the fractionalized streaming content, it does372not strike me, certainly, to think, and many of the other373members, as a merger, we should initially be concerned with a374look at the entire entity of what's being promised.375    I want to thank our witnesses for being here with us today,376and I look forward to your testimony.377    I now will recognize the Ranking Member, Mr. Nadler, for378his opening statement.379    Mr. Nadler. Thank you, Mr. Chair. Mr. Chair, the380entertainment and media landscape has been transformed in381recent years. Many of these changes have brought undeniable382benefits, such as streaming services that give viewers more383options at their fingerprints than ever before. Many of these384changes have also come at a cost, as lax antitrust enforcement385and waves of consolidation have concentrated power in just a386few major players.387    One thing that seems to be constant over the last few388decades: A merger involving Warner Brothers. It began with the389disastrous AOL-Time Warner merger in 2000, and then the short-390lived partnership with AT&T in 2019, and then its latest391incarnation since 2021 as Warner Brothers Discovery. Now, once392again, Warner Brothers is up for sale to another media giant.393    This time, it has accepted a bid from Netflix, the global394leader in streaming services and a major content producer in395its own right, to control Warner's streaming and studio assets,396including such mammoth properties as DC Studios, HBO and HBO397Max, and Warner Brothers' motion picture and television groups,398as well as Warner's 128 million streaming subscribers.399    What we know today about this proposal raises a host of400questions about its effect on the pricing, production, and401distribution of content going forward. We have also heard great402alarm from the movie theater industry, which despite claims403from Netflix that it will keep theatrical businesses operating404largely as they are, takes seriously comments from its co-CEO405who called movie theaters, quote, ``an outmoded idea'' and,406quote, ``not consumer friendly.''407    Further, label groups like the Writers Guild of America and408the Directors Guild have raised concerns and say that this409proposed merger is not in their interest or the publics.410    Serious concerns have been raised about whether this deal,411which by some measures would give the merged company over 30412percent of the streaming market, could reduce competition,413diminish consumer choice, raise subscription prices, threaten414jobs, wages, and working conditions in the creative industries,415and reduce diversity of content and viewpoints.416    Netflix argues that this merger would allow it to better417compete with the range of other platforms that are battling for418eyeballs and attention from viewers, including other streaming419giants like YouTube, traditional movies and television, social420media, and more. If Netflix must get bigger to compete, that is421a sign of a market that is already highly out of balance.422    Under the Netflix deal, Warner's cable channels, including,423most notably, CNN, would be spun off into a separate business424that would not be part of the sale. Another major media425conglomerate, Paramount Skydance, has now made a hostile bid to426control all of Warner's properties, including CNN.427    Even though the Warner Brothers' board has rejected the428Paramount bid for now, Paramount could still pursue a buyout of429Warner Brothers. A potential merger with Paramount presents its430own set of antitrust concerns, by collapsing what are now five431major movie studios down to four, thereby reducing competition432and substantially increasing concentration within an already433concentrated industry. Not only could this bring higher prices434and less choices for consumers, but it could also bring fewer435jobs and lower wages for content creators.436    The Paramount bid also brings its own unique set of437circumstances of concerns because it would place CNN under the438control of the Ellison family, the same billionaires who have439curried favor with Donald Trump by imposing control over the440content of CBS News.441    Just weeks ago, Bari Weiss, the controversial minder placed442in charge of CBS News, spiked a story on 60 Minutes that would443have shed light on the Trump Administration's lawless campaign444to send migrants to be tortured in an El Salvadoran prison.445Presumably, the Ellisons have similar designs on making CNN446more Trump friendly.447    A merger with either Netflix or Paramount would result in a448behemoth that poses significant antitrust and other public449policy concerns that require careful scrutiny.450    I have long believed that the unchecked concentration of451economic power in any industry poses a danger to economic452fairness and to our democracy. While I do not prejudge the453merits of any proposed merger, I am concerned with any deal454that would significantly increase the concentration in a market455that is already highly concentrated. Such increased456concentration could not only harm consumers, but we have also457heard great concern from the creator guilds who are borne the458brunt of decades of media consolidation that historically has459been followed by fewer jobs, downward pressure on wages, and460reduced creative opportunities.461    That is why it is so important that any merger be reviewed462with careful and impartial analysis by the antitrust463regulators. Unfortunately, under the Trump Administration, the464antitrust review process has been dangerously corrupted and465politicized.466    Just last month, we heard from a former senior Trump467Administration antitrust official who testified that, under468this administration, the rule of law is being replaced by the469rule of lobbyists and corporate interests.470    We know that the White House routinely intervenes in471Justice Department matters, often to benefit the President and472his cronies. Already, Trump himself has said, quote, ``I'll be473involved in that decision,'' when asked about the Warner474Brothers deal.475    Does he intend to put his thumb on the scale in favor of476Paramount as a reward for his friends, the Ellisons who,477according to press reports, have already promised to implement,478quote, ``sweeping changes'' over CNN if they were to take479control? This is not a farfetched scenario. There are troubling480reports that Trump tried to block the AT&T-Time Warner merger481as retaliation for CNN's critical coverage of him during his482first administration and campaign.483    Mr. Chair, we have seen this movie before, and the sequel484is almost always worse. A hallmark of the second Trump485Administration has been a determined effort to exercise control486over the independent news media, whether through frivolous487lawsuits against media outfits, limiting press access to the488White House and the Pentagon, and gutting funding for public489radio and PBS. The White House must not be allowed to use the490merger review process as another tool in its campaign to bend491the media to its will.492    A proposed merger, whether it be with Netflix, Paramount,493or some other suitor, must be analyzed on its own merits. What494we know already about the antitrust review process under this495administration calls for serious congressional oversight, and,496unfortunately, our Republican colleagues have turned a blind497eye to their oversight responsibilities during this Congress498and today is just one more missed opportunity.499    It is vitally important that we examine the Warner500Brothers' merger closely to ensure that any deal will protect501competition, consumers, and workers, and I appreciate our502witnesses being here today to lend their expertise. I look503forward to today's hearing, and I yield back.504    Mr. Fitzgerald. The gentleman yields back. I now recognize505the Ranking Member of the Full Committee, Mr. Raskin, for his506opening statement.507    Mr. Raskin. Mr. Chair, thank you very much, and thank you508to all the witnesses for joining us today.509    Against the background of a media industry that is already510heavily concentrated under the control of several multibillion-511dollar media companies, we're gathered to discuss the proposed512acquisition of Warner Brothers Discovery by Netflix, two giant513rivals in the field of entertainment. The alternative acquirer,514Paramount Skydance, is itself not only a giant rival in515entertainment but also a rival in news.516    In ordinary times, we'd proceed carefully with an517acquisition of this size to ensure that it passes scrutiny518under American antitrust laws, but these are not ordinary519times. Just last month, this Subcommittee heard testimony from520whistleblower Roger Alford who served in antitrust at the DOJ521during both the first and second Trump terms. During Trump's522first term, Alford served as Deputy Assistant AG and during the523second as the principal Deputy Assistant AG, which is second in524command.525    He testified to the pervasive practice of lobbyists526attempting to corruptly influence antitrust law enforcement at527the Department of Justice, telling us that corporate lobbyists528now boast about their ability to overrule both the professional529antitrust experts and President Trump's own hand-picked530leadership at the antitrust division. Just to be clear,531Professor Alford is a strong supporter of President Trump. He532served in both the first and second terms.533    He sees clearly that this political and financial534corruption of antitrust law betrays Donald Trump's avowed535populist agenda, as he sees it, the one of lower prices,536affordability, and increased choice and competition that the537President once long ago promised the American people on the538campaign trail. Well, we already know well how this corruption539works in Trump's Washington.540    Professor Alford gave a detailed description of what he541called the HPE-Juniper merger scandal. He told us that on542numerous occasions in a variety of matters, we implored our543superiors and lawyers on the other side to call off the544jackals, but to no avail. Today, cases are being resolved based545on political connections, not on the legal merits.546    These warnings from a top Trump appointee command our547urgent attention. Yet, my Republican colleagues refuse to548conduct any kind of serious oversight of what's going on in the549administration.550    In 12 months, our colleagues have had just one551administration official come and appear before the Committee:552FBI Director Kash Patel. Committee Democrats have invited two553Trump officials as Minority witnesses, and, as you know, we554only get to invite one witness, but we have had two of them:555Mr. Alford and FTC Commissioner Alvaro Bedoya. The Chair has556had only one.557    We urgently need the Attorney General, Pam Bondi, to appear558before the Judiciary so we can conduct oversight over an559increasingly out of control, lawless, and corrupt Department of560Justice, both in the antitrust domain and in many others.561    It's not just DOJ. The whole government is now saturated in562pay to play corruption and lawlessness. Take the example of563Skydance's acquisition of Paramount last year. In late 2024,564incoming FCC Commissioner Brendan Carr accepted two tickets565worth $12,000 to go to the Kennedy Center Gala. The donor was566Paramount whose proposed merger with Skydance was about to567acquire Commissioner Carr's approval.568    Now, I concede that $12,000 these days is petty cash569compared to the billions of dollars that are being raked in by570the President routinely and the corruption flowing throughout571the administration, but pre-Trump, a $12,000 gift to an FCC572commissioner that you're about to appear before would have been573a scandal.574    Well, at the gala, Commissioner Carr reportedly pulled his575host aside and gave them advice. Paramount owns CBS. President576Trump had sued CBS for $10 billion in damages because he didn't577like the way that they edited an interview with Vice-President578Kamala Harris. Well, that, of course, is an entirely frivolous579legal claim. I don't like the way that Fox News edits the580interviews with Donald Trump, but that doesn't constitute581defamation against me. That's just stupid.582    Commissioner Carr reportedly told the Paramount executives583that Trump's grudge against CBS News was so serious that it584would make review of the merger, quote, ``tougher than585anticipated,'' and they might need to make some concessions586directly to the President to convince him to approve the deal.587    Once in office, Carr sat on the merger for months. Why?588Trump could extract extraordinary benefits from the companies589in exchange for approval of the deal. Look what he got: A $16590million contribution to his Presidential library, millions591dollars more committed in free advertising, a promise to592install a Trump-friendly monitor minder in the CBS newsroom,593and the cancellation of the Late Show with Stephen Colbert.594Only then did Carr permit the merger to proceed.595    Ladies and gentlemen, this is not antitrust law. This is a596political and financial shakedown substituting for an antitrust597merger review. It's got nothing to do with antitrust law or598consumer choice or lower prices. It is corruption. It's exactly599what Professor Alford was warning us about, and one key result600of this corruption is a newsroom that refuses to broadcast news601that the administration disfavors.602    A few days after Alford testified, CBS' 60 Minutes was603scheduled to air a special on CECOT, the notorious torture604prison in El Salvador, introduced to inmates there as hell on605earth, that the Trump Administration has used as a dumping606ground for immigrants, many of them lawful asylum seekers.607    Right before the story was set to air, it was indefinitely608postponed. Why? What happened? Well, we don't have to wonder.609Bari Weiss, the new Editor-in-Chief at CBS and the new610government-imposed Pravda-Like media monitor and minder said611she would not let the broadcast go forward without getting612comment from a government spokesperson on the air. The Trump613Administration had refused to allow any of them to comment on614the air.615    Here's Sharyn Alfonis, the 60 Minutes correspondent who616said:617618        Our story was screened five times and cleared by both CBS619        attorneys and Standards and Practices. It was factually620        correct. In my view, pulling it now after every rigorous621        internal check has been met is not an editorial decision. It's622        a political one. We requested responses to questions in our623        interviews with DHS, the White House, and the State Department.624        Government silence is a statement. It's not a veto. Their625        refusal to be interviewed is a tactical maneuver designed to626        kill the story. If the administration's refusal to participant627        becomes a valid reason to spike a story, we have effectively628        handed the government a kill switch for any reporting they find629        inconvenient.630631    I hope that this kind of consolidated corporate government632censorship troubles all our colleagues, Democrats and633Republicans who still have a First Amendment bone in their634body. This kind of censorship regime aligns us with the State635of press freedom in Putin's Russia or Mohammad bin Salman's636Saudi Arabia.637    The economic effects of these side deals must trouble us,638too. Each new merger acts as a new opportunity for the639President to enrich himself and his family and friends. The640cost of businesses involved in these deals now, even as a term641in the economic literature, the Trump Transaction Tax, every642party to this kind of transaction now bears the risk of a643political shakedown for money, concessions that are not644connected to proper antitrust review. It's about what enriches645and satisfies the President.646    Hundreds of economic studies and gangster States show that647these kinds of corrupt practices reduce investment, distort648markets, increase costs, and lead to lower employment.649    Here we are again. When Warner Brothers announced that it650would put itself up for sale, President Trump promised that651``I'll be involved in that decision,'' although no law gives652him a role in it.653    Mr. Issa. Mr. Chair, I must object. I fully believe that654opening statements can be as long as--for the Ranking Members,655can be as long as necessary if they stay on topic. This is656clearly a bashing of the President and beyond the pale of this657Committee.658    Mr. Raskin. I'm not going to accept any subject matter or659content regulation by the gentleman from California. I'm about660to finish, so let's not belabor a ridiculous point. We've never661interrupted an opening statement of anybody on your side of the662aisle. What a ridiculous thing to do.663    Mr. Fitzgerald. I would just remind the Ranking Member that664we're up against an 11:30 kind of hard stop for a briefing.665    Mr. Raskin. OK. I appreciate that and I'll be done in a666minute. OK?667    The President seems to want Paramount and Netflix to668compete for his approval of a deal. Both companies are already669lobbying the White House right now, and to State the obvious,670President Trump is not an antitrust expert, nor is he committed671to antitrust law. He's long been critical of CNN, which is672owned by Warner Brothers. For years, he's told us that he hates673their reporting, he hates their reporters, and he wants to sue674the network.675    Does anyone doubt that one way to entice the President's676favor is to promise him more direct control over CNN?677    Mr. Chair, we should be calling in the government officials678who participated in or acquiesced in these side deals. To date,679I am sorry to say the closest we've gotten to hearing from a680real administration witness is Professor Alford who we invited681here at the Minority's invitation when he could have been your682witness months ago.683    This proposed merger poses significant antitrust questions.684I'm eager to discuss them, but this Committee must also do the685work of ensuring that the antitrust laws are actually being686enforced and not being replaced by a system of corruption.687    Thank you, Mr. Chair. I yield back.688    Mr. Fitzgerald. The Ranking Member yields back. Without689objection, all their opening statements will be included in the690record.691    We'll now introduce today's witnesses: Mr. Jay Ezrielev is692the founding and managing principal of Elevecon, a consulting693firm. He also serves as an adjunct Professor at George Mason694University Antonin Scalia Law School. He previously served as695an economic adviser to the FTC Chair Joseph Simons.696    Ms. Jessica Melugin: Ms. Melugin is the Director of the697Center for Technology and Innovation at the Competitive698Enterprise Institute. Her research focuses on antitrust, online699privacy, artificial intelligence, telecommunications, social700media, and net neutrality regulation.701    Dr. John Yun: Dr. Yun is a Professor of Law at the George702Mason University Antonin Scalia Law School. His research703focuses on antitrust and intellectual property, data, and704privacy. He previously served as the Acting Deputy Assistant705Director of the Bureau of Economics at the Federal Trade706Commission.707    Mr. Matt Wood: Mr. Wood is the Vice President of Policy and708General Counsel at Free Press, a nonprofit organization that709advocates on issues relating to media and technology. Mr. Wood710leads the organization's policy and legal efforts.711    We welcome our witnesses and thank them for appearing712today.713    We will begin by swearing you in. Would you please rise and714raise your right hand. Do you swear or affirm under penalty of715perjury that the testimony you are about to give is true and716correct to the best of your knowledge, information, and belief717so help you God?718    Let the record reflect that the witnesses have answered in719the affirmative.720    Thank you and you can be seated.721    Please know that your written testimony will be entered722into the record in its entirety. Accordingly, we ask you to723summarize your testimony in 5 minutes.724    Dr. Ezrielev, you may begin.725726                   STATEMENT OF JAY EZRIELEV727728    Mr. Ezrielev. Mr. Chair, the Members of the Committee,729thank you for the opportunity to testify on competition and730consumer choice and digital streaming. I am Jay Ezrielev,731founder of the economic consulting firm, Elevecon. I'm also an732adjunct Professor at Antonin Scalia Law School at George Mason733University. From 2018-2020, I worked at the FTC as the economic734adviser to Chair Joseph Simons.735    Digital streaming has revolutionized how we consume video736content. It has driven innovation in both content creation and737distribution, which benefits consumers. It is now the most738popular way we consume video content.739    We now have two potential Blockbuster merger deals in740digital streaming with both Netflix and Paramount seeking to741acquire Warner Brothers. These deals have the potential to742reshape the competitive landscape in digital streaming. There743is an understandable concern about these deals, what these744deals will mean for streaming and content creation.745    Will we continue to have innovation and new compelling746content delivered via digital streaming. The two potential747deals will face antitrust merger review, most likely by DOJ.748Will this review make sure that we continue to have the749benefits of digital streaming competition?750    The two deals come at a pivotal time for antitrust.751Antitrust enforcement agencies have been shifting the focus of752enforcement from the core focus of harm to competition to753pursuing broader policy goals. This shift began under the Biden754Administration with the antitrust enforcement agencies pursuing755a broader policy agenda, such as combating unfair treatment of756workers and seeking to diminish corporate power.757    This is a troubling development for antitrust. Deviating758from the core antitrust principles will diminish antitrust as a759tool for preventing harm to competition. Expanding antitrust760beyond this core principle replaces efficient market function761with enforcers' views of what is fair and equitable. It chills762entrepreneurship by supplanting an entrepreneur's judgment763about the best way to allocate capital. It is this764entrepreneurship that has brought us enormous innovation and765prosperity.766    While it's still early days, antitrust enforcement agencies767under the current administration are continuing to apply a768broad scope of antitrust enforcement. Even more troubling,769States are increasingly pursuing their own antitrust agendas770beyond preventing harm to competition.771    In reviewing the potential Netflix and Paramount deals,772antitrust enforcement should focus on the core antitrust goal773of preventing harm to competition. The enforcers should not be774picking which of the two deals should go through based on what775they think will deliver the best outcome for consumers. This776choice is for Warner Brothers Discovery shareholders.777    The enforcers should also not use their leverage to extract778a settlement that advances a policy agenda. The focus should be779strictly on preventing harm to competition.780    I don't know if there is a compelling antitrust case781against either of the deals. However, I would be highly782skeptical of an enforcement case based entirely on a structural783presumption, or a presumption of substantial lessening of784competition based on an increase in market concentration in the785relevant market. Such an increase in market concentration786should be a starting point for determining whether to move787further in the investigation. An increase in market788concentration is not by itself a reliable indicator of harm to789competition.790    Most importantly, let's keep antitrust focused on791preventing harm to competition and not on advancing a political792agenda.793    [The prepared statement of Mr. Ezrielev follows:]794795[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]796797    Mr. Fitzgerald. Thank you, Doctor. The doctor yields back.798Ms. Melugin, you may now begin.799800                  STATEMENT OF JESSICA MELUGIN801802    Ms. Melugin. Chairman Fitzgerald, Ranking Member Nadler,803and the distinguished Members of the Subcommittee, thank you804for inviting me to testify. My name is Jessica Melugin. My work805focuses on technology and antitrust at the Competitive806Enterprise Institute, a nonpartisan public policy organization.807I am also an antitrust and competition fellow at the Innovators808Network Foundation.809    It's sometimes said that history does not repeat itself,810but it often rhymes. Certainly, there is a familiar tone in811today's conversation around the merits of antitrust812intervention in digital streaming markets to what we've heard813before in past calls to intervene in entertainment mergers.814    In 2005, after what The Wall Street Journal then described815as, quote, ``The not so gentle prodding of Federal antitrust816authorities,'' the movie rental chain Blockbuster dropped its817bid to purchase rental chain rival Hollywood Entertainment.818Defenders of the merger pointed to the emerging competitive819threat of a then up-and-comer who had signed up three million820subscribers to rent DVDs through the mail. That disruptor was,821of course, Netflix.822    While regulators fretted about the combined market power of823two brick-and-mortar DVD rental chains, the market was busy824shifting the paradigm.825    An increasingly widespread internet soon disrupted826traditional models of distribution once again. Netflix was827adept enough to navigate that transition from the post office828to telecom, and the company now finds itself more directly829involved in the conversation around preserving competition in830the entertainment industry.831    While the details of these separate cases have changed, the832lessons of regulatory restraint remain the same. Just as the833Federal Trade Commission could not have anticipated the834technological shifts that rendered physical DVD rentals nearly835obsolete, antitrust regulators today still cannot predict what836might come next. They can, however, observe current market837dynamism to better understand how allocating economies of scale838and vertical--allowing economies of scale and vertical839integration could benefit consumers.840    As digital streaming companies and adjacent market841participants adjust to a landscape where consumers' time and842attention are now the most important remaining scarcities,843regulators will likely evaluate their attempts to merge, adapt,844and compete. This process should follow well-established845methodologies, using economic evidence to determine the846relevant market and possible anticompetitive effects, while847equally assessing the potential proconsumer consequences.848    Determining the proper relevant market will be the first849step of any antitrust litigation, but it won't be an easy task850here. Government efforts to block mergers will likely attempt851to establish the narrowest possible definition of the relevant852market; namely, subscription video-on-demand exclusively. Does853that provide an accurate reflection of how consumers view854possible substitutions? Do broadcast, cable, and satellite855channels still provide ample competitive pressure to restrain856prices, encourage output, or maintain quality for merged857streaming services?858    Looking forward, rather than backward, does YouTube TV or859even the standard YouTube or TikTok platform sufficiently860compete with streaming for consumer attention? Social media's861vast and free-to-the-company content may well constitute a862sufficient competitive threat to streaming services that863justifies their need to bolster their holdings of more864evergreen rewatchable content libraries and the production865capabilities of traditional studios.866    Perhaps concerns about preserving competition are less867about horizontal issues between merging streaming services and868more about the ability of traditional companies to survive and869compete with social media giants.870    Even the narrowest relevant market will prove challenging871for regulators to defend in court. If opponents of a merger872succeed in defining the market as confined exclusively to873subscription video-on-demand, market shares will be difficult874to establish.875    Muddying the waters of market share are the widespread876practices of consumers maintaining many subscriptions877simultaneously, known a multihoming; bundled subscriptions like878Disney Plus that might also include ESPN and Hulu--or maybe879not; third-party bundles offered through mobile carriers,880internet service providers, or credit cards; Amazon Prime881subscriptions that might result more from e-commerce interest882than from streaming entertainment interest; and different883tiered offerings with or without advertising offered for884different prices.885    Regardless of the relevant market, the market shares agreed886on, courts will then be required to evaluate the competitive887effects of the merger. Proposed mergers may hold the promise of888significant economic efficiency gains and commensurate benefits889for consumers.890    Even horizontal aspects of mergers, such as those involved891in Netflix and Warner Brothers Discovery deal may benefit892consumers. Increased selection, cost savings, and more accurate893recommendations are all possibilities.894    Regulators must recognize that traditional media companies895require flexibility to adapt to prevent meeting the same fate896as the Blockbuster dinosaur. Constraining these entities from897pursuing such arrangements by pretending the market is static898will neither benefit consumers nor competition in the long run.899    Thank you for this opportunity.900    [The prepared statement of Ms. Melugin follows:]901902[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]903904    Mr. Fitzgerald. Thank you, Ms. Melugin. Dr. Yun, you are905now recognized.906907                    STATEMENT OF JOHN M. YUN908909    Mr. Yun. Good morning. Thank you, Chair Fitzgerald, Ranking910Member Nadler, and the distinguished Members of this911Subcommittee. It's a true honor to be here. My name is John912Yun, and, obviously, we're here to assess the potential913combination of Netflix and Warner Brothers and associated914assets.915    I see three main issues and there are more, but these are916the three that I'll focus on, but happy to discuss more:917    (1) The consumer-facing combination downstream in the918streaming service market been Netflix and HBO Max. What's going919to happen to those prices and the bundles? What's the relevant920market to assess that competition?921    (2) What happens to HBO Max? Does it remain an independent922streaming option, or it will be integrated? If so, how?923    (3) What about the upstream assets, the combination of924Netflix production studio, as well as Warner Brothers Studios?925What happens to that content library, the content creators,926that distribution? Is there an incentive to foreclose others927from access to that previously do have access?928    As I mentioned, these invoke both what we call horizontal929and vertical issues in antitrust. Horizontal issues are your930standard issues of competition between competitors. Think Coke931versus PEPSI, Samsung versus Apple. Those are the same issues932that we can see both in the streaming market downstream and the933streaming production market upstream.934    There's also something called a vertical issue, though, and935that's the possible control of two or more levels of the supply936chain. Here, the primary concern that I've seen is that Netflix937now will control WB Studios' assets and distributions and IP938properties. What does that mean for consumers?939    All of these questions are going to be governed under the940Clayton Act, Section 7, which is substantial lessening of941competition or a tendency to create a monopoly, and the courts942have consistently examined three markers to whether this is943going to be met or not and that's usually prices, output, and944innovation. Other objectives have been called on and looked at,945at times, but these are the three that almost inevitably the946court's rule examine.947    That being said, let's start with question (1), the948combination possibly of Netflix and HBO Max. The key question,949as mentioned previously, will be what is the relevant market in950which these streaming services compete? Is it limited to just951other streaming services, like Amazon Prime Video, Apple Plus,952Peacock, and Paramount Plus? If so, what's the market share? We953do have debates of whether market shares are good proxies for954market power, which is what we're really interested in, but the955courts have been clear, this is what they will look at.956    The combination of Netflix and HBO Max will, according to957some estimates, and these are just public estimates, can be958above 30 percent. I'll mention in a moment why that matters.959There are other sources, though, that put it below 30 percent,960so it will be a key question of what the real data shows.961    Assuming it does hit the 30 percent or more marker, the962reason this matters is a 1963 Supreme Court case, Philadelphia963and National Bank, and it established a structural presumption964that if you're above that 30 percent, there's a presumption965that the deal is illegal and harmful to consumers. It doesn't966mean it is. There is an opportunity by the parties to967demonstrate that the procompetitive benefits outweigh that968presumption. It's not an illegal call, but it is a strong969presumption and relevant for this assessment.970    It's pretty close to 30 percent, the sources I've seen, so971that does move it a little bit closer to the parties' favor,972but it is still above that presumption, so it's going to be an973incentive to the parties. I say that not cynically, but it974could be the reality that the market is broader than just975streaming services. It could include YouTube. It could include976TikTok. It could include cable, satellite, et cetera. That's977going to be a key question and something that I think I'm happy978to explore further later.979    In terms of question (2), will HBO Max remain an980independent service is a concern I've seen publicly and in981forums, just in preparation for this hearing. An astounding982statistic that Netflix has shared is that 75 percent of HBO Max983subscribers are also Netflix subscribers. That makes me sort984of, based on my economic training, think that this is going to985be integrated into some type of premium tier. Happy to discuss986further. That's just a prediction. It's unlikely that HBO Max987will remain an independent service post-merger.988    Question (3) is the vertical concern, that Netflix's989control of WB's assets upstream will lead to some type of990foreclosure of that. For example, Harry Potter was available on991Peacock even though that's a WB property. Ted Lasso was992produced by WB Studios for Apple Plus. Will all of that stop993post-merger? That consideration I think will also be part of994what the agencies and the courts examine.995    With that, my time is up, so thank you very much.996    [The prepared statement of Mr. Yun follows:]997998[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]9991000    Mr. Fitzgerald. Thank you, Doctor. Mr. Wood, you're now1001recognized for 5 minutes.10021003                  STATEMENT OF MATTHEW F. WOOD10041005    Mr. Wood. Chair Fitzgerald, Ranking Member Raskin, Ranking1006Member Nadler, and the distinguished Members, thank you so much1007for inviting me today.1008    This hearing is about competition and consumer choice and1009digital streaming, and that means we must talk about the string1010of mega mergers, both past and newly proposed. Runaway1011consolidation eliminates choice. Companies routinely break1012promises and evade merger conditions, and under the Trump1013Administration, these deals pose tremendous danger to free1014expression.1015    I must clarify something, though, before I begin, because1016of the companies involved in these mergers talks and confusion1017about our name. My organization is called Free Press Action, a1018republic interest group that works on media tech and telecom1019policy, and for more than 20 years, we've been analyzing these1020markets, opposing harmful mergers, and fighting both government1021censorship and undue corporate control.1022    We are not affiliated with The Free Press, which is the1023publication Paramount Skydance purchased last year before1024making its founder the editor-in-chief of CBS news.1025    I don't solely practice antitrust law, but since leaving1026corporate firms, I've spent much of my last 16 years opposing1027mergers that enrich executives, bankers, and lawyers at1028everyone else's expense.1029    While Paramount is still pursuing Warner Brothers1030Discovery, the winning bid for now is Netflix's $82.7 billion1031deal to buy a company that, as Mr. Nadler noted, is somehow1032always up for sale in deals that amounted to bad industry bets1033and huge debts.1034    Netflix is the largest streaming service in the world, with1035more than 300 million subscribers. Warner Brothers HBO Max is1036well over 100 million, third largest in the U.S. by most1037accounts. Paramount is likely the fifth largest streamer in the1038U.S., and that combo, of course, would couple two of the big1039five Hollywood studios, impacting the market for theatrical1040releases, movies, and TV.1041    Both potential mergers could severely harm the viewing1042public, creative industry workers, journalists, movie theaters1043that depend on studio content, and their surrounding Main-1044Street businesses in your districts, too. We fear that either1045deal will reduce competition in streaming and adjacent markets,1046with fewer choices for consumers and fewer opportunities for1047writers, actors, directors, and production technicians. Jobs1048will be lost. Stories will go untold.1049    Now, we still need to crunch the numbers for an array of1050markets and metrics. We'll listen critically to claims about1051supposed merger benefits, and we'll ask whether there is1052sufficient competition left to ensure that the billions saved1053in promised synergies are passed along, not pocketed.1054    The job for antitrust enforcers is clear. They must engage1055in careful product market analysis to determine if these1056mergers violate the law and whether they promise any real1057efficiencies, not just speculative assurances, as the case law1058says about alleged benefits to the public.1059    Either Netflix or Paramount buying Warner Brothers could be1060presumptively illegal under DOJ's merger guidelines. Members of1061this Subcommittee and others in Congress have suggested so on a1062bipartisan basis. Section 7 of the Clayton Act prohibits any1063merger that would, quote, ``substantially lessen competition or1064tend to create a monopoly in any line of commerce.'' That is1065clearly a risk here.1066    In our view, either deal likely places far too much power1067in too few hands over what Americans watch and where they get1068their news. The numbers for that news component are dwarfed by1069the dollars thrown at the streaming side in studio catalogs,1070but in addition to HBO, Warner Brothers, of course, owns CNN1071and other cable channels. Netflix doesn't want those.1072Paramount's Ellison family desperately does.1073    We're all too familiar with claims that media giants need1074to merge to continue producing news. Their trickle-down notion1075is that more money for shareholders means more investment in1076news or content creation, but as history shows, companies merge1077to save money, not spend it. Every merger obliterates jobs.1078Post-merger companies will reduce output and raise prices1079whenever they can, and having fewer voices make censorship1080easier with fewer corporate gatekeepers to lean on.1081    Even more dangerous than the notion that mergers can save1082the news is the way this President has weaponized the merger1083review process. In conjunction with other threats made in plain1084sight, his agencies have used deal approvals to win favors. The1085FCC has blessed mergers moments after deal proponents promised1086to follow the President's demands to end diversity policies.1087They've capitulated on chilling requests to reshape their1088newsrooms.1089    The merger that spun Paramount Skydance, as Mr. Raskin has1090said, was graced by an FCC investigation and a multimillion-1091dollar settlement of a specious lawsuit over editing choices in1092an interview with then Vice-President Harris. Paramount1093installed a former Trump Ambassador as a bias monitor and1094recently spiked that 60 Minutes investigation into Trump1095Administration wrongdoing.1096    Now, Paramount Skydance's CEO promises, as Mr. Nadler says,1097to, quote, ``make sweeping changes to CNN if he takes it1098over.'' Tilting a merger review process to facilitate that1099outcome should be unthinkable under the First Amendment.1100    Should a President use merger reviews to gain political1101outcomes he wants? Some may think it depends on which party1102holds the White House, but that answer abdicates the antitrust1103oversight this Subcommittee conducts and the antitrust laws1104enforcers must apply.1105    Thank you and I look forward to your questions.1106    [The prepared statement of Mr. Wood follows:]11071108[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]11091110    Mr. Fitzgerald. Thank you very much. We will now proceed1111under the 5-minute rule with questions, and I recognize the1112gentleman from California, Mr. Issa.1113    Mr. Issa. Thank you, Mr. Chair. Today, we're going to speak1114about disproportionately the Warner Brothers acquisition,1115needless to say. I could begin this by talking about the1116political differences that have been alleged in the two buyers1117and the seller. I could, of course, continue to talk about the1118last administration that never found a merger that they could1119accept and blocked many even when overthrown repeatedly by the1120courts. I could but I won't because, in fact, this is an1121antitrust hearing, and I would like to focus on that. I1122admonish all our witnesses in their answers to get off the1123politics and get on to the specifics of antitrust law.1124    I'm going to start with Professor Yun. You mentioned the1125Philadelphia case, but you had some doubts even though Nielsen1126has said that in the streaming, you have a 37 percent market1127share already by Netflix, an additional 6 percent to be1128acquired. Is there any reason that we shouldn't believe that1129this is at least in the ballpark of correct based on one of the1130largest and most historically significant rating organizations?1131    Mr. Yun. Thank you, Representative Issa. I appreciate the1132opportunity to speak on this.1133    Yes, you're hitting on the key issue, which is the1134reliability of the data that we're using for this presumption,1135and this presumption is very important. Again, we can debate1136whether it should be, but it is standing law today.1137    Mr. Issa. Right, but it's standing law to push the scale to1138where there is essentially no further choice and you, more or1139less, close the door.1140    Even if, in fact, hypothetically, they're at 29 percent,1141and let's just say that Warner Brothers is 5 percent, you're1142still going over the 30 percent, and few would doubt that1143you're going to end up with that.1144    Let me get into a couple of points that you hit. Since11452011, Netflix has increased price 10 times and a total of 391146percent increase after adjusting for inflation. Is that, per1147se, a demonstration of market power by any reasonable1148definition?1149    Mr. Yun. I can get in the weeds. I would say that almost1150every streaming service has some degree of what we in economics1151call market power. It's not the same as what we think in1152antitrust. What do I mean by that? Earlier, there was a chart1153that was shown that showed--1154    Mr. Issa. Well, let me back you up, because I have limited1155time. The reality is that the price and the cost of receiving a1156streaming service on an adjusted basis led by Netflix has gone1157up but not down. From a standpoint of a market, a market that1158is functional, that we would normally think lowers costs as1159volume goes up, would you say that this market shows signs of1160not being functional based on Netflix's consistent lead above1161the rate of inflation?1162    Mr. Yun. The reason why I have some concern about the1163premise that this is necessarily a problematic market is simply1164because I saw a chart that showed the highest price increases1165were from Apple Plus, Peacock, and Paramount Plus, who have the1166lowest share in these markets and the lowest--1167    Mr. Issa. Aren't they all still losing money?1168    Mr. Yun. Yes, no, I--1169    Mr. Issa. OK. Isn't there a difference between when you're1170making money and you increase prices beyond inflation and when1171you're losing money and you're trying to minimize your losses?1172    Mr. Yun. I think that's fair.1173    Mr. Issa. OK. I want to go on quickly. You talked about1174vertical and horizontal, and there's plenty of caselaw,1175including the Supreme Court case that broke up the relationship1176between the studios and the theaters being owned. Aren't we1177again in a situation where if Netflix post-acquisition controls1178a massive library to the exclusion of others, that, in fact, we1179have the same situation again in which--and I'll just use my1180own girds--if you can exclude and you are a must-have and must-1181pay and must-buy, isn't that, in fact, a situation in which, at1182a minimum, everyone would have to have Netflix to have access1183to not just new production but a vast library that, in fact, by1184definition, every child grows up watching?1185    Mr. Yun. I think it's a relevant concern. It's something1186they will definitely look at for sure.1187    I did look at some statistics that showed what is the1188percentage of Warner Brothers in terms of theater production,1189and it's at that 15-20 percent, so roughly 80 percent is1190outside of that. I think that--1191    Mr. Issa. Of course, theater production is important. I was1192talking about libraries, and they are both important.1193    Let me just close with one closing question, which is:1194You've looked in the past at the years that this Committee1195oversaw the potential mergers to create competition against1196Verizon by Sprint, AT&T, T-Mobile, ultimately making a decision1197that a relative duopoly was better than one strong player and1198many weak. Aren't we in many ways in that same situation, if1199you could opine on that?1200    Mr. Yun. It's going to depend on how we define the relevant1201market in terms of what is really constraining Netflix's price.1202Yes, if it's fairly narrow, yes, the consolidation is1203definitely going to be something that's sufficient for probably1204the presumption.1205    Mr. Issa. Thank you, Mr. Chair.1206    Mr. Fitzgerald. The gentleman yields back. I now recognize1207the Ranking Member from New York, Mr. Nadler.1208    Mr. Nadler. Thank you, Mr. Chair. Mr. Wood, supporters of1209large media mergers, often promise innovation, better services,1210and more content. Looking back, did those mergers deliver to1211the public?1212    Mr. Wood. In a word, no, I don't think they did, Mr.1213Nadler. You have listed a litany of deals that involve this1214company itself. Warner Brothers is now currently up for sale1215again. I would say with respect to streaming, for example,1216that, yes, there has been innovation. Consumers have benefited1217from some of these technological changes, but it's not because1218of the mergers.1219    The merger promises that are made are often paper thin,1220very hard to enforce if they're even real in the first place,1221and companies routinely break those promises because there's1222very little antitrust enforcers can do after the fact to unwind1223a deal. That's a pretty extraordinary remedy. If they promised1224not to fire people or promised not to raise prices and they do,1225there's not much people can do besides wag a finger at them.1226    Mr. Nadler. Hollywood unions, such as the Writers Guild,1227are opposing acquisition by either Netflix or Paramount because1228of concerns that consolidation will reduce employment1229compensation and creative opportunities. What happens to1230independent producers and creators when the number of potential1231buyers for their work shrinks?1232    Mr. Wood. Yes, so thank you. We've spoken to some of those1233writers. We've spoken to some of those independent producers.1234They're very concerned and rightly so. When the number of1235buyers for their work shrinks, it's not just that there are1236fewer open doors; there are fewer doors at all, so they have1237fewer places they can take their content.1238    They also have the loss of competition and diversification1239in the market, fewer smaller independent producers or fewer1240scrappy competitors who are willing to get a chance on1241something different. It tends to homogenize content and, by1242design, reduce the number of outlets and number of choices they1243have.1244    Mr. Nadler. What would the effects of these consolidations1245be under the diversity of content that we see today?1246    Mr. Wood. Well, thank you. As I was saying, it would be1247less diversity. I don't know if there is a metric we can apply1248to that, but we do see companies in the broadcast space and the1249streaming space and the studio space homogenizing their1250content, making things more so-called mainstream, taking fewer1251risks, needing more money to come back in through the door to1252justify the huge budgets for the few features they put out. It1253tends to reduce price--sorry. It tends to reduce choice and1254increase prices and just to, as you said, reduce diversity and1255the differentiation between the products these companies have1256to put out to compete and survive.1257    Mr. Nadler. Reduce the amount of conflicting information1258and opinions given to the public?1259    Mr. Wood. Yes. That's something our organization has worked1260on for years. When it comes to the news and competition there,1261the FCC's tests for that are different from antitrust but1262related in many ways. They look for more competition, more1263diversity, and localism.1264    We're often told that, well, the only way we can have more1265competition in local news is to have fewer competitors. The1266only way to have more diversity is fewer voices, and the only1267way to have local content is to nationalize everything. We,1268frankly, don't believe those claims, and we've seen them harm1269communities time and again.1270    Mr. Nadler. Everything you just said seemed very1271concerning. The way to have diversity is to have fewer voices.1272    Mr. Wood. Yes. As my colleagues on the panel have said1273sometimes you're going to have a situation where if a firm is1274failing or can't compete, then a merger might save them and1275preserve that voice. We are very skeptical of those claims1276because in Warner Brothers' case, for example, by last year's1277metrics, they were the second most successful studio. They're1278the third largest streamer in the country.1279    The notion that a company simply has to be sold or else the1280shareholders won't make any money, to us, is very questionable.1281I know that the streamers, in general, have not made as much1282money as they'd like and some have lost money.1283    There are legitimate questions there about the1284profitability of streaming, but as a going concern in an1285overall business, we just simply are very skeptical of claims1286that these companies need these mergers to survive or thrive.1287    Mr. Nadler. Thank you. I understand that Netflix has made1288promises that it would mitigate possible competition concerns.1289In particular, it says that it would continue to sell shows to1290rival streamers. How should these promises be considered in the1291analysis of potential anticompetitive or public policy harms?1292    Mr. Wood. If you're asking me, again, yes. As I said a1293moment ago, I think that these promises are very hard to1294enforce, I could imagine a condition in a merger approval if it1295went through. It's just that whatever these companies agree to,1296it's sometimes easier for them to lawyer their way out but not1297even technically break the promise.1298    Then, once that promise is broken, as I said, there's very1299little that enforcers can do to unscrambled the egg and put1300things back together and make companies whole who aren't1301getting the benefits of these promises that were made.1302    Mr. Nadler. Thank you. Mr. Chair, I have a number of1303unanimous consent requests for the record from a series of1304labor groups coming out against or raising serious concerns1305with the Netflix-Warner Brothers merger.1306    Mr. Fitzgerald. Very good. Go ahead.1307    Mr. Nadler. Oh.1308    Mr. Fitzgerald. Unanimous consent.1309    Mr. Nadler. First, is the IDA statement opposing a merger1310involving Warner Brothers Discovery. The DGA statement on1311Warner Brothers Discovery/Netflix. The SAG-AFTRA statement1312regarding proposed Netflix/Warner Brothers transaction. A1313prepared statement for the record of the Writers Guild of1314America West and the Writers Guild of America East. The1315``Hollywood Teamsters: Warner-Netflix deal is another call for1316alarm for entertainment workers.'' Finally, the Producers Guild1317of America.1318    Mr. Fitzgerald. Without objection. The gentleman's time has1319expired. I now recognize the gentleman from Virginia for his1320questions.1321    Mr. Cline. Thank you, Mr. Chair. The witnesses for being1322here for a timely hearing on a--at this moment in time with1323this a snapshot of a marketplace in constant change and1324constant motion.1325    We recognize that the country operates under free-market1326principles, and businesses should be able to transact as long1327as they don't create clear antitrust problems. Clarity is1328something that is in the eye of the beholder, but I do think,1329in contrast to Mr. Wood's opinion, general skepticism--the1330standard is not general skepticism about whether a company1331needs a merger to survive. That's really not what we're talking1332about here. We're talking about the definition of the relevant1333streaming market and the regulators and how they're defining1334it.1335    Ms. Melugin, why don't you have a go as to how you would1336define the relevant streaming market today for antitrust1337purposes, and what single biggest mistake that regulators are1338making when defining it.1339    Ms. Melugin. We had a very helpful example recently with1340the decision in the Meta trial, which was seeking to unwind a1341merger, and unfortunately the judge kind of anticipated1342questions like this and said this is just not a market1343definition that they buy. It had excluded too many entities1344that provided real competition to Meta. That the mistake you1345could make here would be the same.1346    I'm not privy to the kind of privileged information that1347talks about market shares, or eyeball time spent on streaming,1348but regulators probably will be, and it will be their job to1349make a case that it's not comparing apples to apples in terms1350of finding out who might be a good substitute. It's about what1351consumers feel is a substitute.1352    That would include saying it might be apples to oranges1353with some of these streaming services and other variants in1354social media, but would a consumer maybe substitute an apple1355for an orange if they had to, they probably will.1356    That goes to a really, as we've all agreed, an incredibly1357important piece of this is what is that market share. If it's1358above that 30 percent threshold, it doesn't mean that it's a1359closed case and its anticompetitive, you still have a court1360that's going to assess what are the competitive tradeoffs here.1361    You have a very difficult task if it even just is above1362that 30 percent mark to say there aren't going to be economic1363benefits to consumers here, but if you expanded the market1364definition you might not even get to that 30 percent number. It1365will be for the courts to decide, I suspect.1366    Mr. Cline. Dr. Yun, how would you define relevant streaming1367market today, and what is the single biggest issue facing1368regulators and the mistake that they might be making?1369    Mr. Yun. Your question hits what I think will be probably137080 percent of the investigation and the debate between the1371parties and the courts and the agencies.1372    It is natural to think it's a streaming market. They're1373probably the closest competitors. As just mentioned, does it1374include other services.1375    Let me just share with you, sir, the lines are being1376blurred. Netflix also offers not only on-demand, but also live1377sports, they offer podcasts, and they offer video games.1378YouTube TV, the linear TV that replaces cable, now has on-1379demand. YouTube itself will now carry the Oscars.1380    The line is blurring between these, and I say that not1381because it's going to be defined broadly. I say that simply1382because it's hard to cabin these platforms into specific1383categories that we want to do. It will be the job of the1384agency. It's a data question. No one can sit here and say what1385the market will be. It's going to be based off the data.1386    Mr. Cline. Under current antitrust law, when does vertical1387integration in media markets pose competitive harm rather than1388generate efficiencies?1389    Mr. Yun. That's the key issue. The key question, there are1390other vertical issues, but as I mentioned in my opening1391statement, the key vertical issue is whether Netflix is in1392control of Warner Brothers Studios' IP property and1393distribution rights, does that create the opportunity for them1394to foreclose third parties who previously had access to those1395assets.1396    That question is something that is a very detailed one.1397It's going to look at margins at various levels. What is their1398incentive to do so. What is their market share upstream and1399downstream. Are there substitutes for these IP properties.1400These questions have already been asked here at this hearing1401and it is going to be asked by the agencies. Again, we're not1402going to know until we see the data.1403    I will say this, though, usually this is fixed through a1404commitment by the parties to offer this content through1405arbitration going forward, 5-10 years typically. This was1406Comcast NBCUniversal, this was AT&T Time Warner. They're going1407to probably do the same here. Studies have shown it has been1408effective in preserving competition. This is done by Dennis1409Carlton, et cetera. These commitments are court-ordered and1410enforced, and I'm guessing Netflix will offer the same.1411    Mr. Cline. Thank you. I yield back.1412    Mr. Fitzgerald. The gentleman yields back. I now recognize1413the Ranking Member of the Full Committee, Mr. Raskin, again.1414    Mr. Raskin. Thank you, Mr. Chair. If Paramount were to1415acquire Warner Brothers, it would put CNN under the same1416ownership as CBS. When the Ellisons, who own Skydance, were1417seeking to acquire Paramount, they made Trump-friendly changes1418in the newsroom, including installing an ombudsman, which news1419staff referred to as a hall monitor for them, and so we can1420only assume the same kind of fate for CNN.1421    Mr. Wood, when there is consolidation in the news media,1422how does this affect the freedom of speech and expression in1423the marketplace for ideas generally, and specifically in the1424Trump period given the very specific phenomena that have arisen1425in terms of the review process.1426    Mr. Wood. Yes. Thank you for the question, Ranking Member1427Raskin. Your question lays it out well and there really are two1428distinct threats, at least. First, typically speaking, when you1429have fewer competing voices, you have fewer people working to1430get stories, you have fewer risk takers. Reduction of1431competition reduces the number of opportunities to even tell1432different stories.1433    In this administration, we've seen not just consolidation1434at large as a problem, it's the merger process itself being1435used, as you detailed so well, as a carrot and basically1436saying, if you don't agree to change your news coverage, then1437we won't approve your deal. That's the thing that should be1438completely out of bounds, but has happened very often with this1439administration.1440    Mr. Raskin. What is happening at CBS News under the new1441management?1442    Mr. Wood. Well, I am not a media critic, but I can1443certainly see what's happening. I know even yesterday there1444were concerns about the evening news and how it was being used1445to praise the administration rather than to potentially1446criticize its actions.1447    It's the litany of changes that you discussed, the pulling1448of the story from 60 Minutes, all the changes to the evening1449news and the way that they are seemingly looking for1450administration approval of their news rather than reporting on1451the government as any journalist would want to do.1452    Mr. Raskin. Well, I'm really a stranger to antitrust law. I1453never taught it. I never even took it. I am going to be reading1454some books on it this year in anticipation of maybe a change in1455our political fortunes in the new Congress.1456    Is there anything within antitrust law which considers the1457specific First Amendment implications with respect to media1458mergers that makes it a different kind of analysis from other1459business antitrust analysis?1460    Mr. Wood. I wouldn't say--I would want to look at that1461myself. I did take it, but it was a while ago now and I've done1462a lot--1463    Mr. Raskin. Dr. Yun, you might know.1464    Mr. Yun. It's a great question. I would say that generally1465speaking court precedent would say no, they wouldn't exam it.1466    Mr. Raskin. It's just treated the same way?1467    Mr. Yun. It's output prices and innovation, and First1468Amendment issues would fall.1469    Mr. Raskin. OK. I would like to ask all our witnesses, does1470everybody agree that Federal antitrust agencies should be1471subject to intensive congressional oversight? Starting, Dr.1472Wood, with you.1473    Mr. Wood. Yes.1474    Mr. Raskin. Dr. Yun, do you agree with that.1475    Mr. Yun. It seems quite reasonable.1476    Mr. Raskin. Yes. Ms. Melugin?1477    Ms. Melugin. Yes.1478    Mr. Raskin. Yes. Dr. Ezrielev?1479    Mr. Ezrielev. Yes.1480    Mr. Raskin. Yes. OK. All right. When I raised the question1481of whether corruption was interfering with proper antitrust law1482analysis I was chided by one of my colleagues for ranging far1483afield from the subject.1484    If corruption has actually entered, and perhaps some people1485can never see corruption when it comes to Donald Trump, so set1486him aside for a second, if corruption actually entered the1487antitrust review process through money corruption or political1488influence, would that be a problem? Again, I would like to1489maybe ask each of you. Yes, Mr. Wood.1490    Mr. Wood. It would definitely be a problem. I wouldn't be1491naive and think that political influences never played a role1492before. What we're seeing so extraordinary in this1493administration is the openness of it, and the use of antitrust1494and merger review, I would say the misuse, to ring out1495conditions from companies who want approval of their deals.1496    Mr. Raskin. Yes. Dr. Yun, do you agree?1497    Mr. Yun. Yes. I was at the agency 18 years. I'm an1498antitrust purest, it should be based off the staff and their1499recommendation.1500    Mr. Raskin. It's an economic analysis. It's not a question1501of whether you can mobilize this lobbyist or this political1502force to your side.1503    Mr. Yun. Absolutely.1504    Mr. Raskin. Ms. Melugin.1505    Ms. Melugin. Yes, I would agree, this should be matters of1506traditional laws established in a bipartisan way over the last150740 years, the consumer welfare standard and economic analysis,1508no matter who is installed in any given administration.1509    Mr. Raskin. OK. Dr. Ezrielev?1510    Mr. Ezrielev. Yes, I'm against corruption in the agencies.1511    Mr. Raskin. All right. Mr. Wood, let me come back to you.1512Antitrust law did start with the idea of both benefiting the1513consumers, but also benefiting society by having competitive1514forces. Would you just say a word about what consolidation1515means generally for a free society?1516    Mr. Wood. Well, your question about antitrust and First1517Amendment concerns is obviously valid and important in the1518media context. There's a marketplace of ideas that has shrunk,1519too. I agree with my colleagues, the market questions are the1520paramount question, although I shouldn't say paramount in this1521case, but we have to be certainly cognizant of the impacts on1522our civic information and democracy being impacted by the loss1523of that source of information.1524    Mr. Fitzgerald. The gentleman's time has expired. I now1525recognize the gentleman from Texas.1526    Mr. Good. Ms. Melugin, consumers increasingly subscribe to1527multiple streaming services, and recent year's subscription1528costs have gone up significantly. At the same time, most1529streaming services haven't been profitable despite increasing1530subscription costs. Hard to say those words. You struggled,1531too. I get it.1532    Where do we go from here, and will subscription costs keep1533rising, will they eventually run out of business due to lack of1534profitability, and how does regulating the current market help1535things for consumers in competition?1536    Ms. Melugin. That's a bundle of excellent questions and1537observations that I would simply say that the best way is that1538they're still sorting this out. It's a relatively new advance1539here, the streaming services, and there's going to probably1540need to be some amount of consolidation. There's probably going1541to be some amount of failure.1542    Failing in a market system isn't the same as a government-1543imposed failure on these companies or having taxpayers on the1544hook. It's kind of the natural part of creative destruction1545that happens. There might need to be some calling from the1546herd. There might need to be some consolidation for achieving1547economies of scale.1548    That even in the different forms of streaming services we1549see now, like Amazon Prime is a fascinating example of one that1550is tied to an e-commerce delivery package, people are trying--1551these companies are trying lots of different approaches to1552become profitable and to give consumers what they want.1553    This latest deal that we're talking about today is a lot1554about combining Netflix distribution advantages and expertise1555and recommendations and things like that with very valuable1556library content at Warner Brothers. Will that be successful for1557them and they'll be able to gain more market share if this deal1558is allowed and drop prices, I don't know. It's not about for1559me--my job isn't picking the winners or losers or telling these1560companies how to act. It's saying that these are the sound1561rules of the road in traditional antitrust, and we should stick1562to that whoever we're evaluating.1563    Mr. Good. Thank you. Dr. Ezrielev, forgive me if I1564mispronounced your name, in the current market only Netflix has1565been consistently profitable, with HBO and Disney Plus only1566recently turning a profit, while most streaming services1567operate at a loss. Correct me if I'm wrong, too.1568    What impact would be preventing a merger between Netflix1569and Warner Brothers, or Paramount, or any other company, have1570on the market, or any of these businesses, and will we ensure1571competition, or will it lead to a situation where companies1572will end up running out of business like Blockbuster?1573    Mr. Ezrielev. Thank you for asking that question. There1574were a lot of questions.1575    Mr. Good. We're good at that here.1576    Mr. Ezrielev. I'll take it one-by-one. It's important to1577let the market sort this out. This market has been very1578successful in generating growth and innovation and new content,1579and at the core of it is that these companies are trying to1580create content that is appealing to consumer.1581    At the same time there's been growth in streaming. Just1582because you are losing--earning a negative margin at current1583demand levels, it doesn't mean that's going to continue as1584demand grows. That's been the driving dynamic of this space.1585    It is rational for companies to create more and more1586content to gain more consumers for your streaming service so1587that as demand grows, you'll be able to earn higher margins1588later on.1589    As far as the impact of this deal, that this is just market1590trying to reallocate capital to meet demand the best it can. In1591terms of Netflix and Warner Brothers, there are complimentary1592assets on both sides. The way you could combine these assets to1593generate even more compelling content, stream content in a more1594efficient way, find consumers, create content that is appealing1595to viewers, this is how you grow the service, and that's going1596to be good for Netflix and Warner Brothers. I think. I don't1597know. The future will tell.1598    It's going to be good for the entire industry. We need this1599kind of dynamic competition to drive more innovation, better1600content, better ways of delivering content to viewers, and,1601also, to use data more effectively to reach viewers with1602content that they'll find appealing.1603    Mr. Good. Thank you.1604    Mr. Fitzgerald. The gentleman yields back. I now recognize1605the gentlewoman from Vermont.1606    Ms. Balint. Thank you, Mr. Chair. I'm going to start by1607just doing some level setting. Americans don't like these1608mergers. They don't want a few giant companies controlling what1609they see and what they hear. We want choices. We want more1610choices. We want artistic freedom. We don't want a handful of1611companies deciding the content that we see. I hear this over1612and over again from my constituents.1613    When these giant companies merge, things get better for the1614people at the top over and over again. Every single time. Worse1615for the rest of us. I want us to remember that two of the three1616companies we're talking about today exist because of at least1617one previous merger. It wasn't long ago that Paramount,1618Skydance, Warner Brothers, and Discovery were separate1619companies. We need competition. We do not need more1620consolidation.1621    Mr. Wood, thanks so much for being here today. Why is it1622that our media landscape right now has become so consolidated?1623    Mr. Wood. Thank you for the question, Congresswoman. It's1624just decades now of lax antitrust enforcement. That certainly1625started to turn a corner with the last administration. Even the1626first Trump Administration we did see efforts there to try to1627block AT&T from buying Time Warner.1628    There have been some bright spots. There have been some1629mergers that we've opposed that have been stopped, like AT&T1630buying T-Mobile, Comcast buying Time Warner Cable. Those are1631few and far between. There's been this sort of flood of deals1632that have gone through. As you said, ``it always gets better1633for the people in the C-suite, but much less often for their1634customers.''1635    Ms. Balint. I agree. I agree with you, too, that it is lax1636antitrust enforcement. You touched on this earlier, who wins,1637who loses when these mega mergers happen? Let's put a finer1638point to it. Who wins?1639    Mr. Wood. It's the companies and their shareholders,1640although not always because a lot of these deals have been bad1641bets for them as well. We've talked today about potential1642innovation and efficiencies and competition being improved in1643some sense by merger, and I wouldn't say that's impossible, I1644would just say that's a pretty high bar.1645    What you really need is for those efficiencies to be passed1646along to people rather than just pocketed by the companies. You1647need to have remaining competition.1648    Ms. Balint. I agree.1649    Mr. Wood. Sufficient incentive for them to not just pocket1650those savings, but to actually have to put them back into the1651business and try to keep their customers happy.1652    Ms. Balint. I agree. From what we've heard so far,1653Paramount and Netflix have submitted bids that already raise1654significant concerns. We're at the start of what's going to be1655a very long battle about this. Our Committee is not responsible1656at all for deciding which deal, or neither, violates the law.1657That decision is in the hands of the Department of Justice. We1658know that the DOJ has not been unbiased. That is a strong1659concern that many of us on this Committee have.1660    At the last meeting of this Subcommittee, Roger Alford, a1661DOJ whistleblower, described the pay-to-play climate at the1662antitrust division. President Trump recently has said he will1663be, quote, ``involved in the Warner Brothers deal.'' What do1664you think he means by that, Mr. Wood, when he says he's going1665to be involved? What is he talking about?1666    Mr. Wood. Well, I'm smiling because it sometimes is down to1667which movies he wants to see made, so it can get kind of1668ridiculous. It's also just about the Trump family's own fates1669and fortunes here, and then these political choices. Again,1670it's not that the political choices aren't real, or somehow are1671completely invalid, but the government should not be imposing1672its will on companies. That's a violation of the First1673Amendment, when they're dangling antitrust review and approval1674based on content changes.1675    Of course, as we're all saying, this should be a market1676analysis. I agree with my fellow witnesses, that market1677definition is key here, the merger proponents will always try1678to expand that market and say we're not that concentrated,1679opponents of the deal will try to shrink it, those are, again,1680interesting questions, and they're asked in good faith, but1681that doesn't mean that the White House weighing in does1682anything to advance that analysis. It probably just impedes it1683and takes it off track.1684    Ms. Balint. Our job essentially here is to be the watchdog,1685to be doing the oversight, to be the eyes and ears of our1686constituents who can't be in this Committee hearing room. I1687urge the Chair of this Committee to take the role of this1688Committee seriously. There is strong evidence that our1689antitrust enforcement system is being corrupted, and we have to1690use our constitutional authority to investigate.1691    Monopolies hurt all Americans, and whether it's in meat1692packing, whether it is in firetruck manufacturing, whether it's1693a monopoly of the seed industry, or in this case, if it's in1694the media landscape, we have to be effective watchdogs and not1695just roll over for an administration that is not doing its due1696diligence for the American people.1697    With that, Mr. Chair, I have two unanimous consent that I1698bring before the Committee. In relationship to whether further1699consolidation in the industry is going to be a threat to moving1700theaters and theatrical releases, ``Movie Theaters Dread Any1701Warner Bros. Merger, by the Hollywood Reporter.'' The second1702one, ``Gen X Went To Movie Theaters Most Often in 2025,''1703according to New Exhibition Report. Thank you so much, and I1704yield back.1705    Mr. Fitzgerald. Without objection.1706    Chair Jordan. Mr. Chair.1707    Mr. Fitzgerald. The gentlewoman yields back.1708    Chair Jordan. If I could, while we're on unanimous consent,1709have the unanimous consent request from the Chief Legal Officer1710of Paramount Skydance Corporation for a statement to be entered1711into the record.1712    Mr. Fitzgerald. Without objection. The gentleman from North1713Carolina is now recognized.1714    Mr. Harris. Thank you, Mr. Chair. Thank you all to the1715panel for your time and your expertise you've given today.1716    Real quickly, Dr. Ezrielev, as the government, if the1717government is going to intervene to stop these mergers, it has1718to prove that the merger is eliminating competition rather than1719creating benefits for consumers.1720    Now, you mentioned in your written testimony a phrase that1721caught my attention when you talked about significant1722efficiencies that would counterbalance any harmful effects1723associated with an increase in market concentration.1724    What potential efficiencies could you foresee arising from1725the mergers between Warner Brothers, Netflix, or Paramount?1726    Mr. Ezrielev. Thank you, Congressman, for that question.1727There are several sources of efficiencies. The most obvious one1728is that this is a vertical deal, so both--that means I'm1729talking about Netflix and Warner Brothers. The same goes for1730Paramount and Warner Brothers. It means that they're both1731creating content and distributing content. By combining the1732distribution channels of both Netflix and Warner Brothers,1733there are more efficient ways of distributing content to1734viewers. Sometimes you could achieve elimination of double1735marginalizations so that you don't charge your affiliate a1736margin so that you're saving costs. That's potentially a cost1737savings.1738    Another source of efficiency may be better use of data. One1739of the things that Netflix does very well is recommending shows1740to people who are likely to enjoy those shows, and that1741requires a lot of data analysis. Also, creation of shows that1742are going to appeal to the right audience shows that people are1743going to watch, that's very risky, it requires a lot of data.1744    Combining the data of both HBO Max and Netflix, they will1745be able to better understand what viewers want to see. They1746will be better able to market the shows so that the right1747show--the right content is reaching the right viewer. Those are1748two of the bigger ones, but there are probably others.1749    Mr. Harris. Very good. Thank you, sir. Ms. Melugin, in your1750written testimony you did mention that today's calls for an1751antitrust intervention in digital streaming markets as similar1752to those of the past. How is this conversation we're having1753today similar to that in 2005 when you specifically talk about1754Blockbuster seeking to purchase its rival, Hollywood1755Entertainment.1756    Ms. Melugin. I think it's just a big temptation for all of1757us as human beings, and regulators especially, for whatever1758reason, to take kind of a snapshot of things as they are and1759view them as static and then deal with those problems as they1760see them, but, in fact, of course, we have to remember, and we1761get reminded periodically, it's not static. It's dynamic.1762    While the marketplace is out making changes that no1763regulator should be expected to understand there's a certain1764amount of economic data that should and will be evaluated in1765whatever deal ends up happening, that's fair, there's great1766precedent to that.1767    There are considerations, like efficiencies offsetting any1768potential competitive harms; that's great. At some point there1769has to be some amount of regulatory humility that also enters1770the conversation that says we can't actually predict to say how1771will Netflix do after this deal. I don't know. They don't know.1772The people who have skin in the game usually make the best1773guess.1774    We've heard about merges that weren't successful in the1775market as well. No one can know the future, and you just have1776to keep a little bit of deference to market forces and1777interested parties in your mind as you look at these deals.1778    Mr. Harris. Are there any specific mistakes that you might1779reference that regulators made in 2005 that regulators today1780should avoid.1781    Ms. Melugin. Not looking at the bigger picture in terms of1782what technologies are going to come online that sort of1783overthrow the whole system. Right. We all used--I sadly am old1784enough to remember renting DVDs at Blockbuster and Hollywood1785Video. Then, when things got really fancy there were those1786boxes at the grocery store. Amazing innovation. Netflix came1787along and we couldn't believe they were doing it through the1788mail. That was wild and we loved that, too.1789    There are other factors outside the narrow band of the data1790regulators are going to look at in this that are happening1791outside, but, nevertheless, might be impactful. You have to1792make sure that by intervening in these market deals you're not1793preventing some of that beneficial innovation unknowingly.1794    Mr. Harris. Thank you. I yield back, Mr. Chair.1795    Mr. Fitzgerald. The gentleman yields back. I now recognize1796the gentleman from California.1797    Mr. Correa. Thank you, Mr. Chair. I want to welcome our1798speakers today and our witnesses.1799    I represent Orange County, California, Southern California.1800My biggest employer in my district is Disney Land with 40,0001801jobs, plus. You can understand the multiplier effect there.1802Tremendous economic activity.1803    Southern California, California, the entertainment1804industry, film industry, big sector, and the 4th and 5th1805largest economy in the world. That's our bread-and-butter in1806California, entertainment. Yet, all of you know COVID, AI,1807other factors have really hurt our job picture in the1808entertainment industry. Hollywood especially. Losing a lot of1809jobs.1810    A lot of graduates from the local best film schools in the1811country, UCLA, USC, and the other schools, a lot of those1812graduates can't find jobs today. You heard my colleagues today1813presenting letters of concern, opposition to these mergers from1814labor groups. These folks are concerned about their jobs,1815bread-and-butter.1816    I love to hear your academics today, your analysis today.1817Great stuff. Back home people are concerned about their jobs.1818Where are they going to feed their families tomorrow. A lot of1819uncertainty.1820    I'm going to ask each of every one of you, however you can1821answer, are these mergers going to create jobs? Are they going1822to stem from the current loss of jobs that are happening? Mr.1823Wood.1824    Mr. Wood. Thank you, Congressman. We would certainly expect1825them not to stem that loss of jobs and to increase it. I think1826recent--1827    Mr. Correa. Dr. Yun.1828    Mr. Wood. Have shown that.1829    Mr. Yun. I genuinely don't know.1830    Mr. Correa. Ms. Melugin?1831    Ms. Melugin. I think there is a chance that some jobs will1832be lost, and that some jobs we can't articulate at the1833beginning will be created as well.1834    Mr. Correa. Dr. Ezrielev? Please excuse me for1835mispronouncing your name.1836    Mr. Ezrielev. I don't know if they will create jobs or lose1837jobs.1838    Mr. Correa. You have two of you that are uncertain, for1839sure loss of jobs, and possibly loss of jobs.1840    Hollywood, best films in the world. Best entertainment in1841the world. Arguably, yes. Maybe. I don't know. Those1842blockbusters out there, a lot of my constituents worked on1843them.1844    Let me ask you again specifically, Netflix, if Netflix wins1845this bidding competition, are they going to create jobs? Mr.1846Wood.1847    Mr. Wood. Again, it's hard to predict the future, but when1848they say synergies they mean job cuts. They mean other kinds of1849reductions in spending.1850    Mr. Correa. Job cuts. Dr. Yun?1851    Mr. Yun. I don't have a prediction.1852    Mr. Correa. Ms. Melugin.1853    Ms. Melugin. I cannot say for certain.1854    Mr. Correa. Dr. Ezrielev.1855    Mr. Ezrielev. I don't know if they will create jobs. If1856there is growth in the industry, if there is growth in1857streaming and more content that will create jobs.1858    Mr. Correa. In California? In the U.S.? Somewhere else?1859    Mr. Ezrielev. I don't know where.1860    Mr. Correa. If Paramount wins this bidding competition,1861creating jobs, Mr. Wood?1862    Mr. Wood. That's a more classic horizontal merger in the1863studio space, and so, no, again, I would think it would1864decrease jobs.1865    Mr. Correa. Dr. Yun?1866    Mr. Yun. I don't have a prediction on that, either.1867    Mr. Correa. Ms. Melugin.1868    Ms. Melugin. It would be my same answer, I'm unsure.1869    Mr. Correa. Dr. Ezrielev.1870    Mr. Ezrielev. I don't know.1871    Mr. Correa. Here we are as Members of Congress debating1872M&A, economic activity in this country, job creation, bread-1873and-butter, and we're still not quite sure what the effects1874will be of this M&A activity, is that what I am hearing today,1875or we're hearing it will create job losses, is that--1876    Mr. Wood. Again, Congressman, we can only look to the past,1877we can't predict the future. Mergers are designed to save the1878company's money, and those efficiencies might be real for the1879shareholders, but they--1880    Mr. Correa. You begin to understand why we have concerns by1881workers in this area when we don't have answers, and it sounds1882like maybe this is not going to be good.1883    Let me turn very quickly, my last 30 seconds, are these1884mergers going to lower the ticket, the amount I will pay1885monthly for entertainment at home? Mr. Wood?1886    Mr. Wood. No, again, I don't think so. We've seen that1887prices have gone up historically.1888    Mr. Correa. Dr. Yun?1889    Mr. Yun. For some users, yes. For some users, maybe not.1890    Mr. Correa. Ms. Melugin?1891    Ms. Melugin. I agree, it will be probably mixed results.1892    Mr. Correa. Mixed. Dr. Ezrielev?1893    Mr. Ezrielev. I don't know.1894    Mr. Correa. Here we go, we don't know, probably job losses.1895Now, we understand why people on Main Street are concerned.1896Thank you very much. Mr. Chair, I yield.1897    Mr. Nadler. Mr. Chair.1898    Mr. Fitzgerald. The gentleman yields back.1899    Mr. Nadler. I have three UC requests.1900    Mr. Fitzgerald. Before I would like to say that I did not1901know that Mr. Correa represented Disney Land, that sounds like1902a future field hearing for this Committee.1903    Mr. Correa. Offer accepted, sir.1904    Mr. Fitzgerald. Mr. Nadler is recognized.1905    Mr. Nadler. Thank you. I ask unanimous consent for a1906statement for the record of the American Economic Liberties1907Project; for an article in Planet Money titled, ``The Warner1908Bros. Curse;'' for an article in the Verge titled, ``There are1909no good outcomes for the Warner Bros. Sale.'' I have one more.1910Finally, I offer a unanimous consent request for an article in1911the Free Press titled, ``A More Perfect Media, Saving America's1912Fourth Estate from Billionaires, Broligarchy and Trump.''1913    Mr. Fitzgerald. Without objection. The gentlewoman from1914Wyoming is now recognized for 5 minutes.1915    Ms. Hageman. Thank you, Mr. Chair. I want to talk a little1916bit about some definitions before I get into my questions, just1917so that I can understand what your testimony is.1918    Streaming services send video data through broadband1919internet to televisions, computers, phones, tablets, and other1920devices.1921    Linear streaming services deliver live channels over the1922internet, and are commonly considered as alternatives to cable,1923that would be your YouTube TV, Hulu, Live TV, Sling TV, et1924cetera.1925    Then, on-demand streaming services generally provide a1926catalog of shows and movies for consumers to watch without1927waiting for downloads, scheduled air times, or physical copies,1928like DVDs, and that would include Netflix, HBO Max, and Amazon1929Prime.1930    Warner Brothers Discovery, the company that owns HBO Max1931streaming services, Warner Brothers Movie and Television1932Production Studios, and linear cable television networks,1933including CNN, is currently up for sale, and at least two1934companies, Netflix and Paramount, are actively competing to buy1935it, looking at a sale of upwards of $100 billion.1936    Profession Yun, I would like to start with you, and that1937is, as you noticed in your testimony, an initial challenge that1938antitrust official will need to overcome is how we actually1939define the relevant market in this new streaming world we live1940in.1941    Now, can you explain to us why some parties might want this1942definition to more broadly include linear TV and social media1943platforms, and why other parties would want a narrower1944definition, a list just on the streaming?1945    Mr. Yun. Yes, it's the classic struggle in antitrust cases.1946Narrow definitions obviously mean higher market shares for the1947merging parties, and that usually is what the challengers of a1948merger want. The agencies will probably challenge this merger1949if they find sufficient evidence that the market is just1950streaming and then they'll go forward.1951    The party's incentives clearly is to dilute their market1952share, their influence based off the competitors. They're going1953to want to have a broader market to include, as you mentioned,1954YouTube, YouTube TV, cable television, and satellite. The1955inclusion of YouTube onto the market will probably destroy any1956opportunity for this merger to be blocked because that will1957then mean that consumers have a viable option to move their1958attention to YouTube. If the data is there, then I don't think1959this will be challenged. That is everything in terms of this1960debate.1961    Ms. Hageman. OK. Do either the narrower definition or the1962broader definition, which would be better for the consumers?1963    Mr. Yun. For me, the consumers care about their options and1964choices, so I would hope that the market definition adopted by1965either the agencies or the parties map to truly what the1966consumers have options over.1967    If the data does show that consumers, when they see a1968higher price for Netflix, people leave Netflix. Data1969consistently shows that. Where do they go? Do they go to HBO1970Max, do they go to Amazon Prime Video, or do they move to1971YouTube, social media and other platforms? If the data shows1972that they move to the latter, that to me is a great deal of1973evidence that the merger does not consolidate market power1974because the consumers haven't given them that power.1975    Ms. Hageman. OK. Well, then, consolidation of streaming1976services may appeal to consumers who are frustrated with the1977fragmentation of the current market across multiple absent1978platforms requiring different subscriptions.1979    Netflix is the original streaming service, and still today1980considered one of the premium on-demand streaming services. It1981is also one of the few that is actually profitable, so far.1982    While other platforms are trying to grow and turn profits,1983what are the potential negative effects for consumers by1984allowing the top premium service to acquire another? Mr. Yun?1985    Mr. Yun. What are the potential negative consequences.1986    Ms. Hageman. Yes.1987    Mr. Yun. If I had to predict the negative consequence, it's1988most likely going to be those consumers who have no value for1989HBO Max, yet Netflix will most likely increase the price to1990those consumers to access the platform because it's going to1991integrate that content.1992    The winners are most likely HBO Max users today who also1993subscribe to Netflix. I would predict their bundle price would1994be lower. That's what I meant earlier that it will be a mixed1995bag, and it will depend on who's the bigger consumer base.1996    Ms. Hageman. OK. Just one last question. Balance is1997obviously needed between preserving competition and responding1998to these fragmentation concerns. Does allowing the market's1999biggest player to acquire another major player appropriately2000strike this balance, or is there a better way? Mr. Yun.2001    Mr. Yun. Oh, gosh, it's a great question. I'm just so2002limited to whether this deal violates the law or not, and2003that's kind of my focus. There are counterfactuals that could2004possibly be better.2005    Ms. Hageman. OK. Well, thank you. With that, I yield back.2006    Mr. Fitzgerald. The gentlewoman yields back. I now2007recognize the gentleman from Illinois for 5 minutes.2008    Mr. Garcia. Thank you, Chair Fitzgerald. Everyone agrees2009that the rise in on-demand digital streaming has transformed2010and changed the media and entertainment industry. While the2011industry has been transformed, our goal remains the same,2012enforce antitrust laws, and ensure an open competitive market2013that protects workers, consumers, allows new entrance, promotes2014creativity, and free speech.2015    Mr. Wood, thank you for being here today. Netflix and2016Warner Brothers argue that the industry has changed so much2017that the relevant market includes other forms of digital media,2018including social media. Are you skeptical of that definition?2019    Mr. Wood. I'm listening, but I am skeptical, yes. As Dr.2020Yun was saying that is really the entire question here in the2021entire ball game. The question is not just will people switch2022to a different source, but will that behavior discipline the2023ability of the merging entities to raise prices or reduce2024output.2025    There's a couple different questions. There's lots of2026different metrics. Asking about all those metrics is valid, and2027that's really the job that we need the antitrust enforcers to2028do very carefully.2029    Mr. Garcia. Thank you. Another important goal of antitrust2030enforcement is protecting workers from anticompetitive and2031abusive practices.2032    Of course, this deal is just the latest in a series of mega2033mergers in the entertainment industry. Every time those2034companies promise to protect workers and every time they betray2035workers.2036    After Disney, for example, acquired Fox, 4,000 jobs were2037lost. In the years after the AT&T Time Warner merger, 77,0002038workers were laid off. Since merging with Skydance only months2039ago, Paramount has already laid off 1,000 workers, and promise2040to lay off 1,000 workers more in the coming months.2041    Mr. Wood, given this history, are you concerned that2042additional consolidation in this industry will harm workers2043through widespread layoffs, reduce compensation, and other2044anticompetitive practices?2045    Mr. Wood. Yes. Thank you, Congressman. We are very2046concerned. As you said, ``that's the track record,'' and that's2047the design of these deals, is to reduce the head count. That's2048how companies make a lot of the money that they can, in2049addition to being able to raise prices when they face less2050competition.2051    It was suggested earlier that antitrust should not be2052concerned with labor issues. I don't think that's true. I don't2053know that it historically has been enough, but there are courts2054that agree that labor issues are very much the province of2055antitrust law, and so we hope that the analysis will take that2056into account as well. As it's not exactly the same as a typical2057labor market, maybe, but the creators, the artists who are2058putting these products out there, it's almost a shame to call2059them products, because they are not employees of these2060companies, but they also would face reduced opportunities for2061places to find their work made and put on screen if these2062mergers go through and if the number of films made continues to2063dwindle.2064    Mr. Garcia. Thank you. My criticism of the Netflix deal is2065not an endorsement of the offer by Paramount, a company that's2066controlled by Right-wing oligarch Larry Ellison and his son2067David. The Ellisons are already doing Trump's bidding at CBS by2068installing Right-wing ideologues who are swaying the network's2069content in favor of this administration in a very very clear2070way. Now they're telling Trump that if Paramount buys Warner2071Brothers, they'll turn CNN into a Trump news network.2072    Mr. Wood, are you concerned about the possibility of2073viewpoint discrimination at CNN if Trump blocks the Netflix2074deal and gives the green light to Paramount?2075    Mr. Wood. I think you said it well, Congressman. If the new2076owners of CBS want to install a more Right-leaning newsroom and2077change their viewpoint, that's their prerogative. The problem2078is when they're doing that, not only at the President's2079request, but with the threat that their merger won't be2080approved unless they do so. That's the really chilling element2081here.2082    Companies, of course, have a right to change their2083politics, change their coverage, change their newsrooms, but2084when it's not only at the government's request, but under a2085threat from the government of withholding of benefits, or some2086other regulatory action, we've seen this at the FCC many times,2087investigations launch that sort of magically disappeared once2088companies made concessions, and that's the kind of2089interference, not only in the antitrust process, but with the2090First Amendment that gravely concerns us.2091    Mr. Garcia. That's the warning about greater consolidation2092in the industry. Thank you. I yield back, Mr. Chair.2093    Mr. Fitzgerald. The gentleman yields back. The gentleman2094from New York is recognized for UC requests.2095    Mr. Nadler. Thank you, Mr. Chair. Mr. Chair, I ask2096unanimous consent to enter into the record an article from the2097Progressive News Wire entitled, ``Press Freedom Groups Tell2098FCC: Media Consolidation Poses Grave Threat to Independent News2099and Information in the United States.'' Also, ask for unanimous2100consent to enter into the record a prepared statement for the2101record of Cinema United.2102    Mr. Fitzgerald. Without objection.2103    Mr. Nadler. Thank you, Mr. Chair.2104    Mr. Fitzgerald. The Chair of the Full Committee is now2105recognized for 5 minutes.2106    Chair Jordan. Thank you, Mr. Chair. Ms. Melugin, it's about2107the consumer, right.2108    Ms. Melugin. One hopes so.2109    Chair Jordan. Earlier it was said it was an economic2110analysis, it's a market analysis. That analysis is driven by2111the welfare of the consumer. If you go to any other standard,2112you start running into problems. You start saying, oh, it's2113about the content producers, it's about the unions, it's about2114the workers, it's about--if you go anywhere else, you're2115getting problems. Here is the good thing, when you focus on the2116consumer, in the long run it typically benefits the workers,2117the businesses, it benefits everyone, but you have to focus2118there.2119    You get anywhere else--you can create a monopoly where they2120hire a bunch more people, pay them huge salaries, but that's2121not good in the long run for the consumer, or, frankly, for the2122country, for the market, for everything else; is that right.2123    Ms. Melugin. Yes, I would say that antitrust can't serve2124more than one master, and any time you replace any worthy and2125understandably concerned group it's a special interest, and2126that will displace protecting the interest of consumers.2127There's only one person, and there's only one group that it can2128be focused on, and the great thing about picking consumers is2129that at some point in the economy we're all--2130    Chair Jordan. We're all consumers. That's a beauty that's2131standard. When you deviate from that standard, start playing2132games, start picking things, start basing it on anything else,2133I think you run into problems.2134    How is this going to shake out? We don't have to predict2135everything, but what's--I heard Dr. Yun talk about how the2136marketplace is going to be defined and all that. How are you2137guys--give us your sense. That's what we all want to know.2138Maybe you said that already. I was in another Committee hearing2139on this Minnesota fraud, so I apologize, but--2140    Ms. Melugin. It's a hardy, but a newy. Yes, listen, I agree2141with what's been said here. Getting that market definition set2142is going to be hugely important. That affects what market2143shares we're talking about, and that sets either challengers or2144these companies up for success depending.2145    Any deal that happens is going to be reviewed just because2146of the size of it, it's going to be reviewed by U.S. antitrust2147officials, regulators, and then you've heard it all here today,2148what are they going to be looking at.2149    Chair Jordan. Who do you think is going to get the burden?2150Again, depends on how they define the market, but who is going2151to have the burden? Is it going to be on the companies, the2152merging parties, is it going to be on the government to show2153this is anticompetitive? That's sort of the fundamental step2154that takes place relatively early on in this process.2155    Ms. Melugin. Who knows what will happen, but since I got to2156testify today, I will make the prediction that hopefully we2157have a more expansive market, relevant market definition that2158takes into consideration the behavior of its consumers. Even if2159you didn't--you're really only hitting that 30 percent, so2160hopefully we have a broader view of how consumers actually--2161    Chair Jordan. Even under the narrow definition, you're2162close to the threshold, the 30 percent criteria, but under the2163broad definition, no problem. I see the Doctor shaking his2164head. Do you want to weigh in as well.2165    Mr. Yun. That's 100 percent accurate.2166    Chair Jordan. OK. I get it. Anyone else want to--we're2167going to let the Chair finish up here last, but anything else--2168I'll even go to the Democrat witness, Mr. Wood.2169    Mr. Wood. How kind of you, sir. No, as you said, we want to2170focus on the consumer, and whether we focus on other things as2171well--2172    Chair Jordan. No, you didn't say--the last round of2173questions you said you've got to focus on the worker.2174    Mr. Wood. Well, we talked a lot about the markets, too. I2175said we can focus on the labor impacts as well, and I think2176that--2177    Chair Jordan. That's a deviation. That's different. That's2178changing, that's changing the process. In the end, in the long2179run, I don't think that's beneficial. I want to focus on2180workers and make sure they have jobs, too, but you can't do2181that because in the long run it will end up skewing the market.2182    You said you weren't wedded to the welfare of the consumer2183standard, I think that's the right standard.2184    Mr. Wood. Yes. Not solely to that, but I certainly2185understand your viewpoint, too. What I was going to say, in2186antitrust, too, it's always the government's burden to--2187    Chair Jordan. All I'm saying is your viewpoint is going to2188get us in trouble, I believe, going forward. The viewpoint2189focusing on the consumer, as Ms. Melugin pointed out, because2190we're all consumers, is the safest, best, tried and true2191process. OK. I said I'll let you talk, so I'll let you talk2192now.2193    Mr. Wood. I was going to say, it's the government's burden,2194but as Dr. Yun explained earlier, there is a presumption of2195illegality when the concentration levels hit a certain level.2196    To answer your question, it's not going to be the company's2197burden to get this through. It's the government's burden to2198make that case.2199    Chair Jordan. That's my read.2200    Mr. Wood. How they make that case will depend greatly on2201how we draw those market barriers, and we have concerns about2202competition here, for sure, but that work is yet to be done.2203    Chair Jordan. Doctor, you get the last 33 seconds.2204    Mr. Ezrielev. That if we focus on the most narrowest2205market, which is the subscription video on-demand market, the2206concentration level there, even though it's likely more than 302207percent, the market concentration in that market is not2208particularly high, anyway.2209    The 30 percent Philadelphia National Bank threshold has2210zero basis in economics. It's more seen as a necessary2211condition and as a sufficient condition. Even under that narrow2212market definition, I don't know if this is a slam dunk, but2213there are lots and lots of problems with that narrow market2214definition.2215    By definition, it's a relevant market, so whoever defines2216that market that says everything else is irrelevant, and that2217would include YouTube, and that's just--and others, and that's2218just not the case.2219    Chair Jordan. Chair, thank you for this important hearing,2220and I yield back.2221    Mr. Fitzgerald. The Chair yields back. I just wanted to2222wrap up, I guess I'll recognize myself for 5 minutes, but what2223it comes down to is, and what we've heard a little bit today is2224let's actually think about how real people actually make the2225decisions on what they're going to use as their entertainment2226value.2227    If somebody now says that--it seems like one of the hotter2228shows right now is Landman, so if your neighbor or your friend2229says, hey, have you seen the latest episode of Landman, the2230first thing you're going to think is, I don't know because2231what's it on, what's it being streamed on--and then the family2232makes the decision as to, yes, we're going to sign up for2233Paramount Plus because we don't have it right now, but I do2234want to watch Landman. OK.2235    Then, you have the sports issue, which is you have NFL2236teams right now that are on five different streaming venues, so2237the level of frustration I hear from the constituents back in2238the 5th District is why are the Packers on Peacock three times2239this year.2240    I don't know if the mergers necessarily change that,2241because no one is shopping for the actual network. What they're2242doing is they're shopping for the content. Right.2243    From my perspective, the last administration really did not2244look favorably on mergers. Right. Every merger was suspect2245right out of the gate, and what we found was that's not always2246a bad thing. It depends on the market, it depends on the2247content, and it depends on how it's being delivered, and that2248was underscored again today.2249    I just want to thank the witnesses for participating today.2250We do have a couple of unanimous consents. An article published2251in The Wall Street Journal authored by myself titled, ``A2252Merger Could Bring Better Streaming.'' The Ranking Member2253should have offered that one on my behalf. An article published2254in Townhall titled, ``Netflix-Warner Bros. Deal is Free2255Market.'' An article published in Townhall title, ``A Netflix-2256Warner Bros. Deal Puts America First.'' Without objection,2257those will be added.2258    We thank everybody for participating today, and certainly2259want to wrap up with not only thanking everyone for being here,2260but just hang on 1 second, without objection, all Members will2261have five legislative days to submit additional written2262questions for the witnesses, and additional materials for the2263record. Without objection, the hearing is adjourned.2264    [Whereupon, at 11:56 a.m., the Subcommittee was adjourned.]22652266    All materials submitted for the record by Members of the2267Subcommittee on the Administrative State, Regulatory Reform,2268and Antitrust can be found at: https://docs.house.gov/2269Committee/Calendar/ByEvent.aspx?EventID=118797.22702271                                 [all]