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Two weeks back, I set off on a fun task for The Ankler , predicting what M&A could happen under a Trump administration, assuming he wins the November election. For many people in Hollywood, especially some studio heads, that’s easily the most desired scenario—and by “desired”, I’m just looking at M&A, not, you know, everything else—as reporters, analysts, investors, and executives love to imagine M&A scenarios. But as I noted, Nate Silver essentially has the race as a toss-up. A coin flip. So I only analyzed one side of the coin.
Now it’s time to imagine the opposite scenario: what if Kamala Harris wins?
(As a reminder, I try to eschew discussing politics in general, with a carve out for political/economic issues which directly impact the business of entertainment, like antitrust enforcement or regulation.)
Of the two outcomes, it’s easily the harder-to-predict scenario. For Trump, we have four years of him in office and, despite some high-profile cases, he mostly gave a greenlight to M&A under his watch. Kamala Harris, on the other hand, has been vice president for four years, but she’s signaled she’ll be a break with President Joe Biden, whose administration upended antitrust enforcement in America.
Does that mean she’ll be a big force for break-ups? Or revert to the old, laissez-faire, neoliberal, anything-goes, Chicago (and also Harvard) School consensus? Or somewhere in between? At first, I wanted to write this article predicting the break-ups that could happen in entertainment if Harris wins, but then I realized I wasn’t confident that her administration would actually break up a whole bunch of companies.
Instead, I’ll lay out the three potential antitrust scenarios along with four key decisions for a potential Kamala Harris administration.
As a reminder, I’m divorcing my personal opinion on the right policy mix—see here or here—today. Good strategy requires ignoring how you want the world to be and acknowledging what the world is. Instead, let’s try and envision what the strategic M&A/regulatory landscape could look like under a Kamala Harris administration, starting with a brief, brief history of how we got here…
A Brief History of the M&A Landscape
Since the 1980s, industry consolidation has been the norm across most of the economy. While Democrats were maybe slightly more opposed to mergers than Republicans, the neoliberal consensus of the last few decades mostly let nearly any merger through. That’s why under even a fairly progressive politician like President Barack Obama, most mergers were approved—the most egregious examples being either Ticketmaster-LiveNation, Facebook-Instagram, Facebook-WhatsApp, or Comcast-NBCUniversal—with a few “consent decrees” regulating a handful of the most blatantly anti-competitive mergers. (Though those decrees are often ignored, as Comcast may have done after it purchased NBC-Universal or Facebook and its countless violations of privacy.)
The Trump administration marked a partial change to this consensus. This included opposing the AT&T/Warner Bros. merger (though losing at trial). Also, to its credit—assuming you support a pro-enforcement agenda—the Trump-era Department of Justice launched the investigation into Google’s search monopoly.
The Biden Administration, though, represented a true sea change. The “Big Four” regulatory appointments of Lina Khan (FTC), Jonathan Kanter (DoJ Antitrust), Rohit Chopra (CFPB), and Gary Gensler (SEC) signaled a specific antipathy to consolidation across a number of industries and a pro-consumer regulatory agenda. Khan and Kanter, in particular, reinvigorated antitrust enforcement, becoming the latest “trust busters”.
The question is what will happen next.
Harris: We Just Don’t Know What Will Happen with Antitrust Enforcement
Here’s a conditional prediction: If we find ourselves in November with Trump as the winner of the election…
We’ll see a host of headlines predicting a new wave of mergers and consolidation in the trades.
Bank on it. (Will those waves actually happen? Read to the end to find out my take!)
Alternatively, let’s say, in November, Kamala Harris is the presumptive winner of the election. Ignoring all the political stuff that will come with the presumably smooth transfer of power, will we see the same headlines in the trades?
I don’t know.
I want to be precise. I almost wrote Kamala Harris is a “black box”, but that’s unfair to black boxes. (A black box, in engineering terms, means a process that spits out outputs from inputs, but the algorithm/formula/circuitry inside is unknown.) Instead, Harris is a “known unknown”, to quote Donald Rumsfeld.
Frankly, she hasn’t come out strongly one way or the other on antitrust, so either side could make their case.
The pro-antitrust/neo-Brandeisians would note that she’s inheriting the President Biden mantle and presidency. Not all of it, since she’s tried to carve a distinction between her and the current president. But if she follows Biden’s lead, it will mean a continued skepticism about large mergers. Harris has spoken about fighting for working people, and that populist/progressive narrative speaks to stronger antitrust enforcement, not weaker.
Alas, the “Kamala returns to pre-Biden consensus” case is probably stronger. Harris has many times emphasized she will be friendly to business. There’s nothing friendlier than approving mergers! She’s done a lot of fundraising with CEOs, including CEOs whose companies are being sued by the FTC/DoJ. She’s good friends with Steve Jobs’ wife, meaning her aggressiveness in pursuing a break up of Apple would be limited. Not to mention, she got her debate prep from one of the lawyers who defended Google in court.
That brings us to the biggest sin by omission for those folks hoping a new Democratic administration would continue the strong antitrust push: Harris hasn’t said if she’s keeping FTC Chair Lina Khan. Khan is a rock star as far as policy/political rock stars go, and yet Harris has distanced herself from her. (While often celebrating her accomplishments on social media/the stump.)
So, unlike Trump, I could weave a few narratives. Harris could continue staying strong on antitrust, merely wooing donors with talk, or she could deliver on those donors’ hope. I see three scenarios:
Strong on Antitrust/Neo-Brandeisian. This is probably unlikely, but given that the crackdown on antitrust is popular and many Dem politicians support it, Harris could pivot after getting all her donations and try to appease that wing of the party.
Old Consensus Scenario: In this scenario, the business community wins, and most mergers get approved. Call this the “Chicago School/Robert Bork returns” scenario. Consider this a return to the status quo of the early Obama administration, which contested zero mergers in his first term. (For an example across the pond, see Keir Starmer’s recent actions in the UK, including appointing someone from Microsoft—who the UK sued over their Activision acquisition—in charge of their competitiveness committee!) But this feels even more unlikely than the first scenario, though not by much.
“NuConsensus” Scenario: If the old view of antitrust went too far, but the antitrust folks still want civility, I could see somewhere in between. The most egregious mergers and unpopular mergers come under scrutiny, but others slide through.
Each scenario could come with political consequences for Harris. If she is strong on antitrust, CNBC and the business leaders who go on there will let her know, providing lots of headlines about how she’s not friendly for business. If she goes soft (say firing Lina Khan), Democrats on the Hill and activists would be similarly upset.
As such, while you might want me to assign some probabilities to those scenarios, I just can’t do it. That would just be picking numbers out of the air. We just don’t have enough data.
So we have our three scenarios. Let’s run through what I think are the big decisions facing a Harris administration and how she could react in each scenario.
Decision 1: The Four Big Regulatory Hires (Or Fires)
What’s the old aphorism? Personnel is policy? In the case of antitrust, nothing could be more true.
I mentioned the big four of “pro-consumer” enforcers up above: Lina Khan, Rohit Chopra, Gary Gensler, and Jonathan Kanter. Together, they’ve cracked down on illegal behavior but made a lot of enemies in big business. Notably, it would be very easy to simply say, “I’m keeping these four in their jobs”, but Harris hasn’t said that. The first decision Harris will have is to keep or jettison them.
Strong Scenario: In this case, Kamala keeps all four in place.
NuConsensus Scenario: Harris lets some, but not all, of the four go and deals with the resulting backlash. In this scenario, their replacements are moderate types who pledge some enforcement, but maybe aren’t long-time corporate lawyers. Firing Khan won’t be easy, symbolically, but others might be easier to let go.
Old Consensus Scenario: They all hit the road, then Harris appoints foxes to guard the hen house, like Karen Dunn or Christine Varney or Fiona Scott Morton or some corporate law-type who opposes antitrust enforcement in general.
Decision 2: Google
Even though many of the Big Tech lawsuits filed by the FTC and DoJ are working their way through the courts, Google’s trial has already lost one case and could lose another by early next year. (They also lost a private case earlier this year.) Given Google’s size and prominence in the economy, a Harris administration will have decisions to make there early on in their administration:
Strong Scenario: In this scenario, the government tries to pursue a break-up, given Google’s monopolization of multiple industries.
NuConsensus Scenario: Here, I’d see a trial ruling that probably doesn’t break up Google, but may split off parts or come with strong regulations/monitoring. Also, possibly we see a settlement, similar to Microsoft’s deal with the Bush administration to end their antitrust battle. Some pieces may get spun off, but overall, the company stays intact.
Old Consensus Scenario: The government still settles the case, but in this scenario, Google mostly keeps googling.
Decision 3: Big Tech
I almost included Google in this section, but the Google cases are much further along than the Amazon, Apple or Facebook antitrust cases. (The monopolization is also much more clear, in my legal reading.) So what could a Harris administration pursue in this realm? Arguably, given Amazon and Apple’s focus on entertainment, it could be even more meaningful for entertainment.
Strong Scenario: Keeps fighting cases against Apple, Facebook and Amazon. That’s simple. (I know I use “Google” and “Facebook” throughout, and could use their proper corporate names, but…yeah. I think those corporate name changes confuse more than they help.)
NuConsensus Scenario: The government fights some but probably settles other cases with potentially strong remedies. But it would still like to avoid courtrooms where possible, which means settlements and consent decrees. (Which fail as often as they work, at best.)
Old Consensus Scenario: The government tries to settle everything.
Decision 4: Entertainment Specific Mergers
Similar to Big Tech, the DoJ and FTC could also look at the entertainment industry. Now, given consolidation in health care, real estate, finance and, again, Big Tech, I’m not sure entertainment is big enough to attract their interest. But what if a few large media conglomerates decide to merge? Their impact on the economy is small…but not in the public’s imagination. What happens then? In our three scenarios, I see…
Strong Scenario: Any merger of the large companies (say Paramount Global or Warner Bros. Discovery or larger) will get pushback if they try to consolidate, period. While entertainment/media is small compared to other industries, given its consumer-facing setup, it draws a lot of scrutiny.
NuConsensus Scenario: In this scenario, merging up among the smaller players is likely okay, like buying Lionsgate or even a Sony.
Old Consensus Scenario: In this scenario, a new administration sends the message that big players like Comcast can really bulk up. Talent in Hollywood should dread this scenario. (And then regret that their endorsements didn’t come with preconditions.)
What Will Happen? The Likeliest Break-Ups, Consolidation and Regulations
Again, it’s tough to predict what the government will or won’t do. So much depends on who Kamala Harris picks to execute her vision of governing corporate America.
That said, even in the worst case scenario, I see a few antitrust actions that could happen:
- First, I think Ticketmaster/LiveNation’s lawsuit continues. Since most of the public dislikes that company, that’s an easy target.
- Second, I think even strong enforcers leave theater chains alone. Personally, I think this is a shame, since that industry needs competition. I’d break up Regal and AMC, and ensure multiple players in each geographic region, but I doubt it happens.
- Third, I think one major studio buys a theater chain, especially in a relaxed enforcement era and the putative end of the Paramount Consent Decrees.
- Fourth, I really doubt Big Tech gets the greenlight for M&A. It would seem strange to go from suing for antitrust to settling cases and allowing unlimited mergers. A lot of representatives in the House and Senate would also oppose that scenario.
- Fifth, I’d be worried if I’m TikTok. The US is set to ban that Chinese social media app, but that would obviously bug a lot of users and advertisers. Frankly, I’m not sure where a Harris administration would land on this, but it seems like a great chip to play in the, “If Netflix can’t play in China, TikTok can’t play here.” We’ll see what happens.
- Sixth, private antitrust enforcement will continue. If the Harris administration pulls back, we might even see more of it. McDonalds sued its beef suppliers, and Yelp sued Google. Indeed, one of the Google cases came from Epic Games. Expect more along this line.
- Seventh, I think we see more regulation of streamers and/or platforms. The 30% platform tax of Google, Amazon, Roku and Apple in their app stores seems increasingly monopolistic. Even with weak antitrust enforcement, I could see regulators targeting those fees. (Really, taxes. A 30% fee that could lower to 5% with basically zero impact on the underlying tech is a tax/rent.)
Reminder: M&A Frequency is the Most Overhyped Topic in Hollywood
To close, I should remind everyone of my biggest prediction, no matter who wins in November:
Not very much M&A will happen in any given year! And the deals that do happen come out of nowhere.
Let’s start with that second point. The biggest deals of the last ten years have, for the most part, come out of nowhere. Disney-Fox. Warner Bros.-Discovery. Amazon-MGM. Skydance somehow buying Paramount. Out of nowhere. That means the more noise about a merger, the less I trust it actually happens.
As to the first point, really consider all the mergers that we actually saw in entertainment over the last few years since AT&T won approval for buying Warner Bros. Disney-Fox was a legitimate tie-up that shrunk the entertainment sector. After that…not much. Amazon bought MGM, but they’re tiny, and Amazon later admitted they overpaid by about $6 billion. I mean, the biggest deal of the last two years wasn’t actually consolidation but a change in ownership from one billionaire’s child (Shari Redstone) to another’s (David Ellison). Again, back in 2018, I thought that predictions of a wave of consolidation in entertainment were overblown, and six years later, that hypothesis played out pretty well.
Now, don’t get me wrong. The trend across industry—in all parts of entertainment—is still consolidation. We’ve had 40 years of consolidation in entertainment.
But a lot of things have to go write to bring a blockbuster deal to life, from financing to strategy to fit to CEO agreement. (The last is not easy with many of these personalities, who want to be in charge.) So if you’re simply wagering on how many deals will happen, don’t bet on too many in any given year.
All that said, a lot of deal-makers in 2024 have likely been slow-playing deals to see what happens in 2024. So what happens in November will matter a great deal.
