In March of this year the Antitrust Division of the U.S. Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) jointly announced a series of “listening forums” that would help gather real world input from participants in key industry segments on possible reforms to the antitrust regulations pertaining to mergers and acquisitions.1 Co-led by DOJ Deputy Assistant Attorney General (“AAG”) Jonathan Kanter and FTC Chairperson Lina Khan, the third of the four announced forums, focusing on media and entertainment, was held on April 27, 2022.2 In addition to AAG Kanter and Chairperson Khan, the program included seven panelists that provided perspectives from entertainers, music, ticketing, journalism, and next generation broadcast technology.3
Chair Khan started her remarks by recognizing the massive change in the industry for content providers and the way by which consumers now access that content. Khan noted that in 2021 communications and media mergers had a deal value of nearly $200 billion, and she noted vertical integration as part of some of those mergers. Khan also expressed concerns about “bottleneck” situations where a handful of companies control upstream and downstream flow of content, adversely impacting competition, diversity of content, and pricing. She indicated that the FTC is working to improve the agency’s analytical efforts to measure harm especially with respect to these new communications and media platforms and technologies. Newspapers, media, and entertainment are the “lifeblood” of democracy according to Khan, and so it is of the utmost importance to make sure that competition is not adversely impacted through ongoing consolidation in the industry.
The panelists expressed a wide range of concerns in the industry, such as the wave of consolidation in the industry and its adverse impact on diversity of visual and music content, wages, and alternative ticketing options. The panelists also urged the agencies to reject behavioral remedies in exchange for merger clearances, extra scrutiny for hedge fund acquisitions of newspapers, and industry pressures to limit alternative broadcast distribution platform technology options.
AAG Kanter provided closing marks by recognizing that consolidation in the media and entertainment industry decreases programming and leads to the “silencing of voices.” Kanter also noted the issues in the labor market and the need for the antitrust agencies to focus on these issues when looking at revising the framework for the horizontal merger guidelines.
The forum ended with some public comments, most of which echoed similar concerns raised by the panelists, with additional complaints about private equity acquisitions in the industry and vertical integration in the music industry.
With AAG Kanter recently stating that he is “here to declare that the era of lax enforcement is over, and the new era of vigorous and effective antitrust law enforcement has begun,” it is important, now more than ever, for media and entertainment companies to partner with antitrust counsel to strategically analyze potential transactions in the industry, irrespective of size of transaction, in light of such scrutiny. The FTC and DOJ are both ready to test their enforcement mandate from the Biden Administration in this sector. And the Polsinelli Antitrust Team is ready to assist clients.
The final DOJ and FTC Listening Forum, on the topic of Technology, which will be held on May 12, 2022. Click here to download the alert.
FOOTNOTES
1 “Forums to focus on markets commonly impacted by mergers: food and agriculture, health care, media and entertainment, and technology,” March 17, 2022, available at: https://www.ftc.gov/news-events/news/press-releases/2022/03/ftc-justice-department-launch-listening-forums-firsthand-effects-mergers-acquisitions
2 See “Antitrust Enforcers’ First ‘Listening Forum’ On Merger Reform Highlights Ongoing Concerns in the Food and Agriculture Industry” May 9, 2022, and “Antitrust Enforcers’ Second ‘Listening Forum’ On Merger Reform Highlights Ongoing Concerns in the Healthcare Industry,” available at: https://www.polsinelli.com/intelligence/antitrust-forum-highlights-concerns-in-food-and-ag and https://www.polsinelli.com/intelligence/antitrust-forum-highlights-healthcare-industry
3 Bio of the panelists available at: https://www.ftc.gov/system/files/ftc_gov/pdf/Speaker%20Bios%20-%20April%2027%2C%202022.pdf