Writers Guild West Calls for Lawmakers to Look Into Disney, Amazon and Netflix Deals

Katie Kilkenny and Winston Cho
·5 min read

The Writers Guild of America West has broken its relative silence over the past few days amid negotiations to release a 15-page antitrust report arguing Disney, Amazon and Netflix are poised to become “the new gatekeepers” of the entertainment industry.

The paper, released Thursday, argues that recent mergers and deregulation “have laid the groundwork for a future of increased market power that could soon leave just three companies controlling what content is made, what consumers can watch, and how they can watch it.” The report further alleges that these three companies in particular have “amassed market power through mergers and other anti-competitive practices, offering an alarming window into the future of media.”

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Disney’s series of mergers — with Pixar, Marvel, Lucasfilm and others — have led to ramped up prices for its streaming services, further vertically integrated the company, pushed creatives to give up revenue from future licensing of their TV content and “reduced output and innovation,” per the report. Netflix, meanwhile, once helped to promote a competitive environment but “is now using its position as the largest streaming service in the world to abuse its leverage as an employer, decrease innovative content spending and raise prices for consumers,” the report alleges. The WGA West argues that Amazon has parlayed its practices as a tech company to entertainment, aggressively acquiring other companies, kneecapping competitors with “tolls” and allegedly underpaying union residuals.

The Hollywood Reporter has reached out to Netflix, Amazon and Disney for comment.

The union calls for lawmakers and antitrust agencies like the Federal Trade Commission to inhibit any future consolidation, “proactively” investigate signs of anti-competitive practices, and ramp up regulation and monitoring of streaming platforms in particular.

The WGA has backed new merger guidelines unveiled in July by the FTC and Department of Justice, which give a road map for regulatory review of acquisitions, that require companies to consider the impact of proposed transactions on labor. They signal that the agencies intend to review whether mergers could potentially impact wages and working conditions. Mergers that may substantially lessen competition for workers won’t be allowed simply because of benefits to consumers, like lower prices and more choices, according to the guidelines. In October, a federal judge blocked Paramount Global’s attempt to sell publisher Simon & Schuster to the owner of Penguin Random House based on the Justice Department’s monopsony theory that the merger would harm authors of top-selling books.

During an Aug. 10 event with the Federal Trade Commission and Department of Justice over the new merger guidelines, Laura Blum-Smith, the Writers Guild of America West’s director of research and public policy, blamed the strike on a wave of mergers that have handed studios and streamers the power to exploit workers. “Harmful mergers and attempts to monopolize markets are a recurring theme in the history of media and entertainment, and they are a key part of what led 11,500 writers to go on strike more than 100 days ago against their employers,” she said.

Blum-Smith pointed to Disney, Amazon and Netflix as companies that “gained power through anti-competitive consolidation and vertical integration,” allowing them to impose “more and more precarious working conditions, increasingly short-term employment, and lower pay for writers and other workers across the industry.”

Ken Ziffren, a veteran entertainment attorney who’s served as Los Angeles’ film czar since 2014, predicted on Wednesday at an event for media and entertainment lawyers hosted by the Beverly Hills Bar Association that Hollywood will see further consolidation as the seven global streaming platforms shrink to five. “That’s the way that the world is likely to go and what that represents is the need for fresh cash to come into the studio streamers’ hands,” he said.

The mergers and acquisitions landscape has been slowed by rising interest rates and renewed scrutiny from competition enforcers on dealmaking.

The WGA also calls attention to Netflix’s increased subscription fees, which demonstrate its ability to raise prices and maintain low subscriber churn without hurting its market share, according to the union.

“Netflix’s recent actions offer a preview of its future as a content gatekeeper,” the report states. “No longer committed to competitive innovation, the company will slash programming and underpay workers, abusing its dominant position to offer consumers less content — and less innovative content — for more money.”

Disney announced Aug. 9 that it will hike prices on its ad-free tiers of Disney+ and Hulu, as well as ESPN+ and Hulu With Live TV, as it seeks to drag its direct-to-consumer business toward profitability. In November, an antitrust lawsuit was filed against the company in a case targeting its dual role as a content supplier and distributor in business dealings. Disney operates Hulu, the country’s second-largest live-streaming pay TV provider, while also controlling ESPN. The proposed class action accuses the entertainment monolith of managing the businesses as a single entity, claiming that the arrangement allows it to negotiate anti-competitive agreements with its rivals that have inflated the cost of live television streamed over the internet.

Amid renewed negotiations with the Alliance of Motion Picture and Television Producers, which represents all three of these companies as well as their competitors like NBCUniversal, Warner Bros. Entertainment and Sony Pictures Entertainment, the report’s timing seems significant. Writers Guild leaders have long argued that AMPTP member companies have wildly different interests and could make a deal “together or separately,” in the words of negotiating committee co-chair Chris Keyser. By arguing that only three of the AMPTP member companies are poised to become “the new gatekeepers,” the report seems to attempt to highlight and mine these diverging priorities.

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