Striking Actors, Writers Urge FTC to Probe Hollywood Mergers

Dozens of striking Hollywood writers and actors are going beyond the picket line to the next frontier of advocacy against consolidation in entertainment: the federal regulations docket.

Members of the Writers Guild of America West and the Screen Actors Guild—including those who have worked on “Hawaii Five-0,” “13 Reasons Why,” “Parks and Recreation,” and “The Big Bang Theory"—have filed over 100 comments on two ongoing Federal Trade Commission rulemaking efforts. The comments are part of a broader campaign encouraging the agency to probe decades of Hollywood industry consolidation.

Union members argue that a series of mergers and acquisitions have left power over every level of Hollywood production and distribution in the hands of just a few companies, necessitating antitrust scrutiny.

It’s unclear how much impact the campaign will ultimately have, but the effort underscores the urgency of workers across the US—including those in Hollywood—to get more government action on consolidation.

“There’s definitely been sort of a labor turn in antitrust,” said Spencer Weber Waller, a professor at Loyola University Chicago School of Law. “It’s an organic outcome of a more progressive view of both the DOJ and FTC and a number of us in academia that know antitrust can be used in a way that promotes the interests of labor.”

FTC Chair Lina Khan has shown interest in the issue, telling the entertainment industry news podcast The Ankler earlier this month that “there seems to be something that’s broken in the market.” In July, she went so far as to join WGA East picketers outside ABC’s talk show “The View.”

In public FTC meetings, Khan and her fellow commissioners have heard from striking union members including writer, producer, and former “Family Ties” actress Justine Bateman, and Alena Smith, the creator of the Apple TV series “Dickinson.”

The wave of advocacy comes as a variety of other unions flex their muscles against mergers in their industries, such as the United Food and Commercial Workers’ opposition to the $24.6 billion deal between grocery giants Kroger Co. and Albertsons Cos.

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Even if the FTC—or the Justice Department, the other federal antitrust enforcer—were to begin an investigation into Hollywood, that process can drag on for years.

Still, WGA and SAG’s attempt is timed to coincide with the high-water mark in terms of the agency’s recognition of labor-antitrust issues, Waller said. The high-profile nature of the comments, and Khan’s interest in the unions’ concerns, are likely to turn up the temperature on future Hollywood mergers.

The Alliance of Motion Picture and Television Producers—the industry group representing major Hollywood production and distribution companies—declined to comment.

Concerted Efforts

WGA advocacy at the FTC and DOJ over the concentration of the film and TV industry began in earnest in April 2022, when the union filed comments in response to the antitrust agencies’ request for information on a planned overhaul of merger guidelines.

Pressure from the union has only intensified since then. In response to a post from Bateman on the social media platform X, formerly known as Twitter, WGA members swarmed the comment sections of two ongoing FTC regulations: the agency’s overhaul of the HSR form—a disclosure companies must submit to the government when they initiate a merger worth more than $111 million—and later, the merger guidelines.

Both proposed regulations formally recognize and query, for the first time, mergers’ effects on labor markets.

WGA leadership has cottoned on to what appeared to start as a grassroots movement among members, pushing striking writers to submit their own comments on the merger guidelines via template letter in an Aug. 18 email blast obtained by Bloomberg Law.

“For decades, the WGA has advocated for stronger antitrust oversight, bringing attention to the ways that mergers and vertical integration in our industry — from AT&T-Time Warner to Warner Bros.-Discovery to Amazon-MGM to Disney-Fox — have consolidated the power of our employers and harmed writers as well as the diversity of content,” the email read.

Some commenters have gone so far as to submit photos of their residual checks—the money paid to workers on a project based on its performance after release—to highlight the WGA’s argument that writers deserve a greater share of the long-term proceeds.

Asked about the spike in WGA comments on the draft regulations, FTC spokesperson Victoria Graham said engagement with the public can strengthen the regulations.

“We look forward to finalizing both with input from members of the public to ensure the agencies can promote competition by enforcing the antitrust laws,” she said in a statement.

Impact of Consolidation?

The WGA also released a report on concentration in the entertainment industry, titled “The New Gatekeepers.” It laid much of the blame for the working conditions that led to the strike at the feet of Walt Disney Co., Amazon.com Inc., and Netflix Inc.

The three entertainment giants “are perfectly positioned to become the new gatekeepers of media, and are being urged by Wall Street to do so,” the report said.

At particular issue is a trend of vertical integration in Hollywood, the WGA argues—where companies merge with others up and down a supply chain, rather than with direct competitors.

Courts have long treated vertical mergers as less likely to cause competitive harm, although current FTC and Justice Department leaders have said they’re concerned that approach has allowed a small number of companies to dominate every level of certain industries.

Khan, the FTC chair, has hit the same point. It’s notable how similar the state of Hollywood is to “all sorts of other industries where again, we’ve seen consolidation, vertical integration, and the rise of dominant middlemen, intermediaries, and gatekeepers that sometimes are not always serving the best interests of the customers or the producers that they’re connecting,” she said on The Ankler podcast. She blamed a broken “feedback loop” that means those who are responsible for some media’s success aren’t getting paid for it.

But the issues with the “feedback loop” are inherent to the new paradigm of streaming and have nothing to do with concentration, said Geoffrey Manne, the president of the nonprofit research group International Center for Law and Economics.

“It’s just that there is no good data anymore,” Manne said. Streaming services are struggling to determine how much their profits—mostly generated via subscribers—are attributable to any given TV show, he said.

“It’s not because the companies are trying to take advantage of anyone,” Manne said. “They may also be doing that, but that’s the Occam’s razor"—the simplest—assessment.

‘Another Bad Merger’

Labor has long taken on industry consolidation, said Laura Blum-Smith, WGA’s director of research and public policy. But now, those in power are hearing their arguments, she said.

“What’s different is the reception,” Blum-Smith said. “Antitrust enforcers and regulators are really shifting how they are looking at antitrust law, how they’re interpreting it, how they’re trying to enforce it. That’s a pretty profound shift.”

Unions have historically been central to antitrust enforcement, said Sanjukta Paul, a professor at the University of Michigan Law School who specializes in the intersection of labor and competition law. With that in mind, WGA’s campaign “is not surprising at all,” she said.

It appears that the industry, in addition to suffering from concentration, is increasingly becoming an “extractive business model,” where mergers often provide a one-time wealth transfer to shareholders based on cuts to operations and labor costs, Paul said. The WGA comments filed with the FTC reflect that shift and how it entrenches studios’ power over workers, she said.

While that sort of business model may not be explicitly enumerated as anticompetitive in the antitrust laws, the FTC itself is designed to evolve with market realities by protecting fair competition and preventing unfair trade practices, Paul said.

“It’s absolutely true that this is an opportune moment for workers to be acting in this way,” Paul said.

Continued Disruption

Regardless of future FTC investigations, Manne predicted, the knowledge that Khan has taken a personal interest in the strikes will have a deterrent effect on industry mergers.

“It’s impossible to think that if any studios are planning a merger, they’re going through it with same assessment of potential risk they were before,” Manne said. “At the margin, some mergers that were being contemplated might be affected by this tension.”

The WGA workers face at least one insurmountable issue: timing. The merger guidelines are forward-looking, as are the changes to the HSR form, and they can’t be used to unwind previously accepted acquisitions, Blum-Smith said.

That means going after conduct is just as important as merger enforcement.

“There is absolutely going to be another bad merger,” she said. “But I don’t think that blocking the next merger is enough to fix all the problems in this industry.”