Joaquin Castro calls for federal probe of Warner Bros. over handling of ‘Coyote vs. Acme’

Rep. Joaquin Castro (D-Texas) called for a federal investigation into Warner Bros. Discovery over the organization’s handling of “Coyote vs. Acme.”

“The @WBD tactic of scrapping fully made films for tax breaks is predatory and anti-competitive,” Castro said on X, the platform formerly known as Twitter.

The studio reversed its decision to shelve the live-action and animation hybrid movie after The Hollywood Reporter broke the news that Warner Bros. shot down the film, making it one of several nearly completed projects to be nixed for tax write-offs in recent months.

The cancellation sparked outcry from the creative community. After news broke of the Coyote shelving, several filmmakers instructed their representatives to cancel meetings they had planned with the company.

After the outrage, the company announced it would be allowing director Dave Green to sell the movie to other potential buyers. According to The Hollywood Reporter, Amazon is a contender, but screenings for other buyers will be happening this month.

The discussion comes after federal investigators have opened antitrust lawsuits in various other industries including tech, with Microsoft and Google, and entertainment, with Ticketmaster and Live Nation.

“As the Justice Department and @FTC revise their antitrust guidelines they should review this conduct,” Castro’s post said, referencing the film and entertainment studio. “As someone remarked, it’s like burning down a building for the insurance money.”

According to filmmaker Brian Duffield, Coyote creator Green did everything right. He delivered the film on budget at $72 million, hit the right test scores and moved away from his home in London to save the studio money on post-production costs, The Hollywood Reporter said.

Film executives noted that shelving a movie for a tax write-off, avoiding distribution and marketing costs, can make an earnings quarter look better but can also be short-sighted.

Castro previously wrote letters to the Justice Department asking for them to examine the state of competition following the merger of Warner Media and Discovery. He said he applauds the antitrust enforcement agency’s efforts to modernize guidelines around federal mergers.

Still, he asked them to examine the merger because “protecting competition for workers and consumers is the essence of antitrust law.”

“The antitrust laws seek to promote consumer choice, product variety, and industry innovation,” Castro’s April 7 letter said. “Accordingly, if a consummated merger results in dramatically less available content and discourages innovation, the merger should be reassessed.”