In a new piece for RealClearMarkets, Market Institute Senior Fellow Norm Singleton argues that efforts to block the Paramount-Warner Bros. merger misunderstand how dramatically the entertainment market has changed.
The Department of Justice’s Antitrust Division approved the merger in June, but a coalition of 12 state attorneys general is suing to stop the deal. The states argue that combining the two companies would create excessive concentration in the movie and cable television industries.
Singleton argues that this analysis focuses too heavily on legacy markets while overlooking where consumers—and competition—are actually going.
As he writes:
“Those concerned that the Paramount-Warner Brothers merger will create a monopoly on cable TV should consider that cable is dying as more Americans, especially younger ones, are cutting the cord in favor of streaming.”
The movie business is undergoing a similar transformation. Theater attendance remains well below its historical highs, while audiences are increasingly reserving trips to the theater for blockbusters and other “event” movies.
At the same time, streaming services, social media platforms, and independent content creators are creating entirely new sources of competition for traditional Hollywood studios.
Singleton points to the success of movies developed by creators who first built audiences online as evidence that Hollywood’s next generation of talent may emerge far outside the traditional studio system:
“The next Spielberg, Tarantino, or Scorsese might now be uploading content on YouTube.”
Rather than threatening competition, Singleton argues, combining Paramount and Warner Bros. could give the companies greater ability to compete in streaming while creating new opportunities to identify and invest in emerging creators.
He writes:
“Approving the Paramount-Warner Brothers merger may help these creators make it to the ‘big time’ by incentivizing the merged company’s executives to identify leading content creators who can develop new content to attract audiences to streaming services and movie theaters.”
The larger lesson is one antitrust regulators too often miss: markets do not stand still. Cable television is losing viewers, streaming has transformed distribution, and creators can now build enormous audiences without the backing of a major studio.
Antitrust enforcement should account for that competition rather than attempting to preserve the structure of yesterday’s entertainment industry.
As Singleton concludes:
“Approving the Paramount-Warner Brothers merger will enable the companies to better compete in the new media landscape and benefit the American public by making the studios more willing to invest their resources into turning today’s YouTube star into tomorrow’s streaming or movie sensation.”
Read Norm Singleton’s full piece at RealClearMarkets.
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