“Will it reduce options for consumers or increase prices?” asked Gene Del Velcchio, marketing professor at USC. “Will it give Disney undue power? Power not only in terms of consumer choices and prices, but power for the back-end of their business — theater owners etc.” Analysists have been in the dark, hypothesizing the implications of Disney’s latest act of business expansion: acquiring 20th Century Fox for $71 billion. The Disney Corporation has grown to dangerous heights after its latest purchase of 21st Century Fox, leading to an abundance of corporate control, mass job loss, and the possibility of securing its advantages by raising prices on Disney owned goods. Concerns over antitrust policies and obvious horizontal integration issues lead to one single challenge by the Department of Justice, forcing Disney to divest certain sports programming, still leaving the company with a notable dominance of sports media. The company is utilizing its corporate additions while exploiting them to expand widely and with permanence, all without diligent legal vetting (James, 2019).

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Systematic corporate consolidation exhibited by Disney, while based in media, has broad economic effects. In a study conducted by the National Bureau of Economic Research, common economic issues in America were attributed to rising market power like corporate fortification and consolidation. The study claims slow business development, low workforce participation and stagnate wages may all be outcomes of rising “market power.” A trend of steadily increasing markups (Fig. 1) exist across all industries and hint at further capitalization of Disney’s assets. The labor share or wage share however, is ever decreasing. The labor share, as shown in Fig. 2, measures decreasing total worker compensation in tandem with the inverse of markups over time. These trends move parallel, showing how with the growth of mega-corporations, markups increase as well as hurt the labor force (De Loecker, 2-14).

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Bob Iger, among many Disney executives, has informally stated that the merger would be beneficial to the job market. Beyond enduring the Justice Department’s authorization, the Disney Corporation faced no formal government intervention. White House Press Secretary Sarah Sanders vaguely communicated the President’s response to the public deal, stating Trump thinks “this could be a great thing for jobs and certainly looks forward to — and hoping to see a lot more of those created.” This came after a phone call between the President and his personal friend media magnate Rupert Murdoch, owner of the remaining Fox assets, such as the Fox News Channel, renamed Fox Corp. This statement contradicts the President’s statements on another monumental merger between AT&T and Time Warner which he condemned (James, 2019). President Trump’s idea of job creation echoes CEO Bob Iger’s empty statement of job growth.

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“I wish I could tell you that the hardest part is behind us,” Disney CEO Bob Iger said in what could be described as a harsh, falsely prophetic statement to incoming Fox employees. “What lies ahead is the challenging work of uniting our businesses to create a dynamic, global entertainment company with the content, the platforms, and the reach to deliver industry-defining experiences … for generations to come.” The harshness is evident when the representative for Disney, “which has never done mass integration” attempts to describe an all pervasive, immortal media corporation (Villasanta, 2019). Disney has yet to disclose their own estimate of projected job loss despite telling investors that “through workforce reductions” they should expect “at least $2 billion in cost synergies by 2021 from operating efficiencies realized through the combination of businesses” (James, 2019). To reach this $2 billion goal, Rich Greenfield, economic analyst with Bandwidth Technologies International Group, believes “Disney will need to cut well-over 5,000 jobs and the number could easily swell toward 10,000 given the high degree of overlap between the two companies around the world.” While the lives of upwards of 10,000 people will be upended in the coming months, Iger issued their on-boarding statement without humanizing a single entity other than his business.

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The economic dangers imposed on average Americans becomes apparent in horizontal mergers when the owner leverages their broad ownership to increase prices or manipulate consumers to acquire numerous goods produced by the conglomerate. The Federal Trade Commission, a consumer protection agency purposed with regulating coercive monopolies, stated that “the greatest antitrust concern arises with proposed mergers between direct competitors (horizontal mergers)." In spite of the deal solidifying Disney as a composite organization of unprecedented magnitude, few obvious threats have been enacted on consumers. So far, much of the content produced by Disney owned assets pose feasible hazards to consumers, such as Disney’s proposed competing streaming service, “Disney+”.

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Disney+ will be a site, to be rolled out by November 2019, wherein television shows and movies available in Disney and now Fox’s vast libraries of media can be streamed for $6.99, a dollar less than the greatest streaming competitor, Netflix. This includes titles in the coveted “Disney Vault”, a marketing device used by Disney to create a longing for popular classic films while their sales are either restricted or surge in price. The vault keeps certain time-honored favorites copy written to Disney, such as Cinderella, Pinocchio, and The Lion King out of circulation. In terms of making classic animation accessible, the Disney vault reflects its 1990’s promotional material: an imposing, iron vault, locking with a thud. Fox’s extensive accumulation of media gives Disney an advantage in a new market, with Disney confirming just weeks after the merger that the first thirty seasons of The Simpsons will be available on the streaming service. In addition to exclusive rights to the most profitable film series in history with the ownership of Marvel Studios, the exclusivity in cases of consumer exploitation are apparent in the isolated nature of Disney properties.

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The merger doubly exposes Disney to the streaming market because Fox had a controlling stake in Hulu’s shares. Disney’s sprawling points of identification and ownership set Disney in a predictable position of dominance even before the launch of its own streaming service. Scott Martin, an antitrust lawyer said there was a possibility of less antitrust scrutiny over Disney+ because of the recent surge in streaming services. “It has a lot more weight than it did five years ago.” The inclusion of Hulu in their mass of businesses can also be viewed as legitimate “as a positive development insofar as it makes Hulu more competitive” with the other dominating streaming services. By definition, the introduction of Disney+ is an example of horizontal integration because the corporation enveloped and owns a majority of what would be one of its greatest competitors.

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Testifying at a House Judiciary subcommittee hearing, FTC Chair Joseph Simons and Assistant Attorney General for the Antitrust Division Makan Delrahim give unsatisfactory answers to lawmaker's questions regarding the enforcement of antitrust laws. Judiciary chairman, Congressman Nadler, focused on the trend within recent years of relaxed enforcement from the Department of Justice. He posed questions directed at the Federal Trade Commission's lack of auditing vigor, to the point of putting swaths of American jobs at risk.  To this effect, Nadler points out "agencies may not have adequate data to effectively police anti-competitive conduct or block mergers with anti-competitive effects in labor markets." In a cartoonishly oblivious response, FTC Chair Simons said, "I've never thought about it that way, I'm looking into that."  Laborers and voters who find this economic issue lacking authoritative zeal regarding labor security are urged to call their representatives to make their positions recognized.

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It is characteristic of a multi-faceted corporation to create its own services for exhibition, like an in-home streaming service, insuring total command of the field. Disney’s eventual ascent to streaming supremacy is reminiscent of the court case that defined the American studio system by first decimating it. United States v. Paramount (1948) broke up the overreaching studio practices because studio ownership of production, distribution, and exhibition is in violation of antitrust laws. This ended the oligopoly of “The Big Five” studios. The merger marks a fragmentation in the modern media landscape with the subtraction of Fox Searchlight, decreasing the number of major studios from six to five. As consumers, we must be vigilant of companies with assets in several broad reaching markets because they have repeatedly been proven to neglect both the worker and the customer. The landmark ruling wholly pertains to Disney and the court’s intentions are clear when the decision applies: “if it was a calculated scheme to gain control over an appreciable segment of the market and to restrain or suppress competition, rather than an expansion to meet legitimate business needs."

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Click the Disney meme to view my resources for this project.