Distribution & Media Antitrust

Conglomerates of the Digital Era Control More, Not Less

Author: Jennifer Porst

Today’s major Hollywood conglomerates include among their holdings film studios, television networks, cable channels, streaming platforms, publishing houses, home video distribution, music publishers and labels, merchandising sales, and theme parks. They are vertically integrated in that they control all stages of the supply chain, including production, distribution, and exhibition (or retail). They are also horizontally integrated, in that they own multiple companies at the same stage of the value chain within the same sector, increasing their market share and power and thereby limiting competition. Paramount Skydance and Warner Bros. Discovery are no exception. Individually, they already control significant media assets.

Paramount Skydance owns the CBS Entertainment Group (CBS, the CW, and other CBS branded assets like CBS News and CBS Sports), the BET Media Group (BET and its sister channels, and BET+), Paramount Media Networks (cable networks including MTV, Nickelodeon, Comedy Central, CMT, Paramount Network, and Showtime), Paramount Television Studios (produce hits like Landman and Emily in Paris), Paramount Streaming (Paramount+ and PlutoTV), Paramount Media Labs (its in-house ad agency), and Skydance’s Animation, Film, Television, Interactive/Games, and Sports Divisions. International versions of its cable networks and streaming platforms include Argentina’s Telefe, Chile’s Chilevisión, the UK’s 5, and Australia’s Network 10. Globally, it owns and operates over 170 networks and reaches approximately 700 million consumers in over 200 countries around the world. 

Warner Bros. Discovery owns Warner Bros. Motion Picture Group; Warner Bros. Television Group; HBOMax; Warner Bros. Pictures Animation; Warner Bros. Games; New Line Cinema; and a portfolio of cable channels that include Adult Swim, Turner Classic Movies, HBO, CNN, DC, TNT, TNT Sports, TBS, the Discovery Channel, HGTV, Eurosport, TLC, OWN, Food Network, HGTV, Magnolia Network, Cartoon Network, Discovery en Espanol, and more. 

If this merger is approved, horizontal integration would intensify, as there would be fewer companies (and less competition) across each sector (e.g. fewer streamers, fewer film studios, fewer news producers). Vertical integration would also deepen, with the combined company controlling more products from conception, through production and distribution, and straight to the point of purchase. In the case of this proposed merger, Paramount Skydance’s potential control over distribution, particularly digital distribution outlets and the data harvested from those pipelines, raises unprecedented antitrust concerns.

Control of Distribution Imperils Competition

Attaining control of digital distribution has been a motivating driver for David Ellison, CEO of Paramount Skydance. Full control of distribution may sound unlikely given the increasingly diffuse nature of contemporary media: audiences consume content in more ways than ever before, including at movie theaters, on streaming services, via broadcast television, through cable television, via satellite television or FAST services, on PVODs, DVDs, airplanes, social media, and on and on. These expanded options for distributing content have been hailed by some as a democratizing force that makes it possible for all entrants to participate in the media ecosystem. Unfortunately, the expansion and diffusion of our media system have instead meant that it is harder than ever for any media content to rise above the noise and garner an audience meaningful enough for independent producers and creators to make a profit.

Meanwhile, despite these multiplying outlets for audiences, the five remaining major media conglomerates already control more of this vast distribution network than they ever have before. The development of streaming has allowed them to distribute more of their content directly to consumers, thereby bypassing independently owned retailers and exhibitors (for example, movie theaters, record stores, big box stores that sell DVDs, and even external digital services like Google Play). Not surprisingly, then, direct-to-consumer (DTC) distribution has become a key area of growth for the remaining media conglomerates, and for Paramount Skydance in particular. In other words, the problem of vertical integration in media has gotten worse. And in the case of a proposed Paramount-Warner Bros. merger, the combined company’s outsized control, combined with its financial resources, would allow it to keep consumers in its own silo, protected from competition. 

Historically, the courts regulated ancillary markets and tertiary windows (exhibitors like movie theaters and retailers like DVD sellers) to prevent vertical integration. The 1970s boom in independent television content happened with significant controls on distribution in place, allowing for a more open market that gave upstart producers access to distribution channels and ownership. In the late 1980s and into the 1990s, independent film flourished thanks in large part to the new VHS market that allowed filmmakers and independent producers a new, not yet consolidated way to distribute their films profitably. But by the early 2000s, following deregulation in telecommunications, the vast majority of those independent producers had been swallowed up by the major media conglomerates, all of which had opened their own niche “indie” film divisions. The shift helped fund low-budget filmmaking, but only by ensuring that those films would no longer be genuinely independent of the Hollywood machine. 

The Streaming Space Has Become Too Narrow

This merger would put control of Paramount+, Pluto TV, HBO Max, and Discovery+ under one roof and would further narrow the avenues by which producers can make their content available to audiences, particularly in the digital streaming environment. There are additional problems with the streaming landscape that would be exacerbated by this merger. For example, a new cost-plus financing model, now used by nearly all of the streamers, pays producers once for the entire cost of their productions, plus an additional fee, in exchange for long-term global rights. This arrangement eliminates potential losses for producers, but it also forecloses their ability to significantly profit from successes. Mergers like this means fewer buyers, giving producers fewer options for distribution and exhibition, digital or otherwise, and therefore fewer ways to earn a profit, build up an asset base, attract investment capital, and scale sufficiently to compete against global players. 

This narrowing of potential is a function of consolidation. A feature film in the past had a long and winding road through a “waterfall” of potential profits that began with a theatrical release before moving through premium cable, network television, basic cable, DVD, airplanes, etc. Television series similarly had an opportunity to earn money via network, cable, DVD, syndication (reruns to local TV stations), and global distribution. Today, as many of those old windows are collapsing, big media companies have more control over the newer digital distribution outlets. They therefore can dictate the terms of contracts and limit independents’ financial viability. Whereas long-tail revenue streams from old titles used to make financing new ones possible, today’s increasingly consolidated online distribution networks are eliminating even the potential for long-term profitability and revenue. As a result, justifications for pursuing new, original, and/or risky content are disappearing. These austere conditions mean that the viability of independence in the media industry is difficult, if not impossible. 

Control of Data Threatens Privacy

As tech companies gradually creep into media, the role of media content and its importance have shifted. For example, the film and television content produced by tech companies like Amazon and Apple serves a significantly different function than content produced by a legacy media conglomerate like Disney. Tech companies are in the business of cultivating customer relations, gathering data, and selling goods. Their media content serves as marketing, branding, and rewards for customer loyalty, rather than being the end goal in itself. In such a corporate environment, data is increasingly important to consider in legal reviews and regulatory oversight; as a signal of that enmeshment, the Department of Justice has even merged its previously separate Entertainment Division and Technology Division. 

The AI boom has revealed new dimensions of this dynamic, as companies reimagine the utility and profitability of media content. Emerging leaders in the AI industry, the Ellisons—both David and his father, Larry, who has significant ownership in both Paramount Skydance and this proposed merged entity—have demonstrated their desire to push AI forward in a number of ways. Recently, Oracle, the company Larry Ellison co-founded and runs, revealed in a regulatory filing that it cut 21,000 jobs in the last year—about 13% of its workforce—thanks to the adoption of AI technologies. Larry Ellison has also stated that one of his primary goals is to “unify all of the national data, put it into a database where it’s easily consumable by the AI model.” Further, Paramount Skydance stated in its recent earnings report: “We are transforming Paramount into a tech-enabled media company by unifying our platforms, data, and workflows across the business…. From the rollout of our agentic data warehouse, which is simplifying how teams access and act on data, to the rapid scaling of AI-powered development tools, we are building internal capabilities that enhance both speed and quality.” In other words, the Ellisons value this merger not just as a way to amass media systems, but as an opportunity to transform a century of media content and hundreds of millions of media consumers into data points that would feed the growth of AI. 

The collection of large amounts of data is also key to increasing advertising revenue because more precise data means more precise and valuable targeted ads. The Ellisons have already made significant investments in ad technologies like Precision+, Paramount’s AI-powered targeting and optimization product. Its goal is to operate as a flywheel that traps viewers, their time, attention, and wallets within walled gardens. Given the reach and scale of this data, the newly merged Paramount-Warner Bros. would have access to track consumers between and among many businesses. AI systems would then be able to make inferences about users and take action based on those inferences. The scenario raises significant concerns related to consumer privacy and unfair market dominance. Recently, U.S. et al v. Google (2025) illustrated how Google’s possession of data and its use in advertising harmed competition, citizens, and consumers. Former FTC Chair Lina Khan has argued that “firms with concentrated control over data can systematically tilt a market in their favor, dramatically reshaping the sector.” We thus need to rethink how “competition” functions in these digital marketplaces and redefine the market based on the synergies that the companies enjoy by virtue of their vertical and horizontal integrations.

Antitrust Enforcement Cannot Fall Away During Moments of Disruption

Antitrust law in the U.S. requires merger and acquisition review prior to a transaction in order to prevent monopolistic harms before they can occur. When media companies are involved, that entails rigorous review by entities including the Department of Justice, the Federal Communications Commission, and the Federal Trade Commission. Those agencies are supposed to take into account the concerns and perspectives not only of the companies directly involved in the proposed deal, but also of their competitors, companies in other industries, consumers, and labor. 

Arguments against robust policing of antitrust law have entered a fun-house mirror phase, with companies contending that their expansive size is what makes them nimble. Corporations like Paramount Skydance claim that the media and tech industries are so complex and large, and the future so uncertain, that any prohibition of mergers and acquisitions would in and of itself reduce competition and harm consumers. This is decidedly not the case. The plain-as-day fact remains that consolidation reduces competition by eliminating competitors, no matter how many efficiencies or economies of scale are claimed by the resulting conglomerate.

Monopolies and oligopolies have been able to emerge, especially during moments of technological disruption. Companies find ways to dominate, while the law struggles to keep up with rapidly changing market conditions. In these moments of accelerated change, regulators often fail to fully understand the technologies and industrial practices involved. As a result, regulators struggle to find a balance between promoting efficient competition and curbing anticompetitive behaviors. The stakes are too high for that trend to continue in the review of this merger.

The Terms of Media Antitrust Need to be Reconsidered

Given the complexity of today’s media and technology conglomerates, one of the key issues in determining existing levels of competition is the actual definition of the markets under question. This market definition ultimately determines the legal and economic understanding of market dominance and unfair competition. Antitrust law uses malleable concepts like these, in part, to allow for the evolution of the law alongside the evolution of markets. 

In this proposed merger, the companies are involved across many different media industries and subsectors and across many different types of markets, each of which is only loosely defined. For example, streaming may at first appear as one distinct market, but that market could be organized and conceived in any number of ways: around the production of films and series, around the sale of advertising, around the capture of audience data, around the capture of audience attention, around the distribution of licensed or purchased content, and on and on. In addition to market definition, other key concepts in determining a proposed merger’s impact on competition and its legality under antitrust law include:

• The Rule of Reason: Is the behavior of a certain business reasonable given the circumstances? For example, does the newly formed company establish pricing for their theatrical products that disadvantages its competitors? Is that pricing reasonable given the circumstances? Or is it something they are able to do because of their new scale and power? 

• Public Interest: What is in the public interest? The Federal Communications Commission (FCC) plays a central role in reviewing and approving proposed mergers and acquisitions in the entertainment industry, and the public interest is central to its mandate. Over the years, this term has been interpreted in different ways by different people for different purposes. Who is included in the conception of the “public”? And what is in their interest? 

• Consumer Welfare and Benefits: “Consumer welfare” is another contentious term whose interpretation has evolved over the years. Historically, it was thought to mean things like preserving the ability of small businesses to operate and even thrive. Around the 1970s, courts began interpreting it as economic “efficiency,” which primarily meant lower prices for consumers. Are there other broader ways, beyond pricing, of defining consumer welfare? Do consumers benefit when there is more competition that results in better products, services, and innovation? 

It is imperative to clarify or redefine some of these terms. Any consideration of whether or not this proposed deal is anticompetitive should understand these concepts not purely as economic concepts, but in humanistic terms that value labor and and the maintenance of a vibrant and diverse society, culture, and art.