TOM GIOVANETTI: The Free-Market Case For A Hollywood Merger As Paramount Fights Big Tech

It looks like some much-needed changes are coming to the media streaming marketplace, and that’s great news for consumers.

Warner Bros. Discovery, which owns over 60 different entertainment brands including HBO, CNN, Warner Bros., the DC Comics Universe, and channels like TBS, Food Network, and all the Discovery channels, is weighing a sale.

And while there may be multiple suitors, the most likely buyer of some or all of Warner Bros. Discovery is the new Paramount Skydance—largely comprised of the former Viacom conglomerate that owns CBS and, of course, Paramount Studios.

Why does this matter? First, because streaming is a disaster of abundance. There’s a ton of new and archival content out there, more easily available than ever, but it’s hard to keep track of what service is running the shows you’re currently watching. I’ve even heard of people using spreadsheets to keep track of where their shows are streamed, though there are also services like JustWatch that help with this as well. (RELATED: CBS ‘Race And Culture’ Unit Dies Swift Death As Outlet Sheds Jobs Under Bari Weiss) 

This abundance of content, by the way, is the result of two great policy decisions. The major studios promised to make their content more easily available if their copyrights were protected against piracy. Because governments agreed, the content industry kept its promise.

The other great policy decision was to allow broadband companies to invest and build out their networks with a minimal amount of regulation and no price regulation. That led to our incredibly fast and capable broadband networks that can stream 4K video without latency.

So far so good. But by the time you total up the costs of all of your various streaming subscriptions, along with your broadband costs, it may add up to nearly as much as you used to pay for cable service. Too many subscriptions from too many services, none of which seem to be making money. Consumers need consolidation to simplify this mess and to truly fulfill the promise of streaming.

But consumers also need media to end its leftward slant on news and entertainment, and Paramount Skydance intends to correct biases in its media properties. Viacom stagnated for decades because of family and corporate infighting, but the newly invigorated Paramount Skydance wants to correct the leftward leanings of some of their properties like CBS News and 60 Minutes. There would certainly be a benefit to the public in that, as would extending those changes to CNN.

So how should we think about the upcoming furor over a possible Paramount Skydance purchase of Warner Bros. Discovery? First of all, the federal government needs to allow a transaction to take place. The new populism within the Republican Party can sometimes be skeptical of mergers and consolidations, because they don’t want anything “Big.” But in this case, as in most cases, consolidation will actually benefit consumers by simplifying the market and likely saving money on streaming subscriptions.

And second, regulators at the Justice Department need to be wary of other potential suitors that could pose problems. Amazon, for instance, already has significant content (Prime Video), and would be twice as large as its next biggest competitor were it to acquire Warner Bros. Discovery, controlling 35 percent of the market share. Besides, Amazon is already operating under a consent decree because of deceptive trade practices related to its Prime service.

YouTube TV is being resold by Frontier and Verizon as they phase out their own IPTV offerings, which will increasingly make Google a competitor in this space. Indeed, with many major tech companies owning content and entertainment services, real content companies like Paramount Skydance need to grow and acquire other properties in order to scale up and compete with the tech companies already dominating the Internet economy.

Sometimes mergers work, and sometimes they don’t. Infamously. The AOL Time Warner merger did not work, and it was commonly believed that it was due to a clash of cultures between the content industries and the Internet industries. Now, once again, Warner is looking for a suitable partner that understands the content business, and Paramount Skydance is likely the best candidate.

Those of us who believe that markets deliver the best combination of choice and value to consumers should welcome a potential combination of Paramount Skydance with Warner Bros. Discovery. Hopefully the Trump administration will see things the same way and not add any unnecessary friction to this benefit for consumers and the health of our media and entertainment economy.

Tom Giovanetti is president of the Institute for Policy Innovation (IPI), a conservative, free-market public policy research organization based in Dallas, Texas.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

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