As media and tech companies look for ways to combine and grow their content footprints, regulators are beginning to eye their efforts with skepticism.

The big picture: Big Tech deals "will probably heighten calls for antitrust legislation," says former Justice Department antitrust chief Makan Delrahim.

Amazon is in final talks to acquire MGM Studios for roughly $9 billion including debt, according to The Wall Street Journal.

• The deal, which would mark the second-largest acquisition for Amazon, would be a major milestone in the tech sector's push in entertainment.
• MGM has long been considered a prime acquisition target as one of the last independent media companies not gobbled up by a tech firm or bigger studio.

Lawmakers are taking aim at the deal. "This proposed merger is yet another example of Big Tech’s commitment to total dominance in every sector of our economy," tweeted Republican Congressman Ken Buck, a member of a House Judiciary subcommittee on antitrust issues.

• "If Congress doesn't act soon, there won’t be a market Big Tech doesn’t control."

Be smart: Amazon isn't likely to face too much regulatory scrutiny, but that doesn't mean the DOJ and other federal agencies won't look at the potential deal.

• "The Justice Department will take a look at that to see if on the production side — there’s any reduction in competition — and also on the distribution side — if there's any threats of somehow foreclosing (the MGM) content that harms competition," Delrahim says.

The Amazon report follows blockbuster news announced last week that AT&T will spin off WarnerMedia to form a new media behemoth with Discovery.

• Delrahim said that barring any unknown favorable deals, the AT&T deal will probably get cleared relatively quickly. However, the structure will be scrutinized by the Justice Department.
• AT&T shareholders will own 71% of the new company, Delrahim noted, raising questions about the extent AT&T could still have control.
• "Are they going to have a sweetheart deal between that and now the combined company? One way to look at it is that AT&T basically gobbled up Discovery as well, and Scripps, since Discovery bought Scripps."
• But he also noted that “having the Warner assets in [ Discovery CEO] David Zaslav’s hands will be better for consumers because it allows experienced creative executives bringing a more competitive streaming service to the market and also allows AT&T to focus on competing to bring better cell service."

Between the lines: The WarnerMedia/Discovery will be the first major media deal to be scrutinized by the Biden administration, adding pressure to the situation.

• "We think the deal ultimately gets approved, either by the DOJ or by the courts but there is some risk of rejection," writes Blair Levin, an analyst at New Street Research.
• While the companies hope to close the deal by mid-2022, a lawsuit by the DOJ would extend that timeline significantly, Levin notes.
• The last major media merger to face serious regulatory scrutiny was AT&T's acquisition of Time Warner in 2018. The Justice Department and Delrahim sued to block the deal, but failed.

What to watch: The WarnerMedia/Discovery deal has sparked a frenzy amongst media insiders, who argue a deal this size sets a new precedent for other firms.

• Reports began to surface about how Comcast CEO Brian Roberts would respond to the tie-up. Media mogul John Malone said in an interview with CNBC there's "no question" Roberts would have loved to acquire Time Warner.
• Malone noted that there could be a chance to possibly combine the newly-formed Discovery/WarnerMedia entity with NBCUniversal, which is mostly owned by Comcast, “if the regulatory environment permitted."

The bottom line: As content companies get bigger, and as more efforts to combine content assets with distribution assets continue, regulatory analysts say it's likely federal agencies will start to take a closer look at such transactions.

• “[C]ompanies will probably face a more inherently skeptical set of antitrust regulators than the last time Democrats held power,” says Paul Gallant, a media regulatory analyst with Cowen Washington Research Group.

Editor's note: This story has been corrected to clarify that it is AT&T's shareholders, not AT&T itself, who will own 71% of the new company, and also to clarify Makan Delrahim's comments.