Comcast Prepares To Get Even Larger With Sky, Fox Acquisitions

from the what-could-go-wrong dept

The cable company Americans love to hate is about to go supernova. Comcast acquired NBC Universal back in 2011, giving the company unprecedented control of not only the conduit into the house, but also the information and news being sent over those wires. And while regulators affixed some flimsy conditions to the deal, Comcast managed to ignore many of them, a major reason why regulators moved to block Comcast's acquisition of Time Warner Cable a few years ago.

Because we're unwilling to learn much of anything from history, Comcast's now on the verge of growing significantly larger. The company recently unveiled a $30 billion plan to acquire European pay TV giant Sky. And this week, reports began to bubble up indicating that if regulators approve AT&T's $86 billion acquisition of Time Warner, Comcast plans to make its own, massive $60 billion bid for the lion's share of 21st Century Fox assets:

"Comcast Chief Executive Brian Roberts only plans to proceed with the bid if a federal judge allows AT&T Inc’s planned $85 billion acquisition of Time Warner Inc to proceed, the sources said. The U.S. Department of Justice has opposed the AT&T-Time Warner deal over antitrust concerns, and a decision from U.S. District Court Judge Richard Leon is expected in June."

By all accounts, AT&T is likely to defeat the DOJ in court, meaning Comcast's latest megamerger is likely to move forward. The bid is an effort to undermine a similar bid for Fox from Disney, a company Comcast has had an adversarial relationship with ever since executives rebuffed Comcast's $54 billion Disney acquisition offer back in 2004. And while this deal wouldn't include the Fox broadcast network or Fox News, it would include Fox's 30% ownership stake in Hulu (Comcast also owns 30%), it would include numerous U.S. and global operations as well as the lion's share of Fox's film properties.

That said, there's still cause for worry here. Comcast's conditions affixed to its NBC Universal merger just expired, giving it newfound freedom to do things like meddle with Hulu's competitive potential. Should Comcast also nab Disney's 30% stake in Hulu, the company will have full authority to try and hamstring Hulu's ability to disrupt Comcast's own streaming or traditional video services, which is a shame given that Hulu just figured out that it should aspire to something greater than being a glorified ad for traditional cable TV.

Comcast's explosive growth spurt comes as the company has not only successfully lobbied to kill net neutrality and consumer privacy protections, but is quietly securing a massive monopoly over broadband in many markets. At the same time, industry BFF Ajit Pai at the FCC is happily gutting decades-old media consolidation rules designed to protect smaller media outlets from exactly this type of rampant consolidation. For good measure, we're also watching as lobbyists dismantle both the FCC's and FTC's ability to hold Comcast accountable when it engages in anti-competitive behavior.

This provides the cable giant with ample leeway to use its combined domination of both content and broadband to hamstring competitors in an absolute ocean of creative new ways. If you thought the country was having any real conversation about the possible anti-competitive implications of this perfect storm of consolidation, monopoly dysfunction, and dismantled government oversight of telecom monopolies, you'd be wrong.

Filed Under: antitrust, competition, consolidation
Companies: 20th century fox, comcast, sky

Competition Dodges A Bullet As T-Mobile, Sprint Merger Dies

from the phew dept

In the end it wasn't regulators, but giant international egos that derailed Sprint's latest attempt to acquire T-Mobile. As last week's rumors had suggested, T-Mobile owner Deustche Telecom and Sprint majority owner Softbank couldn't agree on terms of the latest attempted megamerger, formally calling off the deal over the weekend. At issue, apparently, was the fact that T-Mobile wanted greater control over the merged company in the wake of the deal. Company executives wanted to keep T-Mobile's momentum, which has resulted in bigger net subscriber gains per quarter than any other U.S. carrier, intact.

The failure is good news for consumers, employees, and business customers alike. Wall Street had estimated that the deal would have killed between 10,00 and 30,000 jobs -- potentially more positions that Sprint currently even has. Telecom history suggests that the reduction of major competitors from four to three would have also had a profoundly-negative impact on overall competition (go ask a Canadian). As a result users not only likely would have seen higher rates, but the end of the recent resurgence in unlimited data plans -- only made possible by T-Mobile's competitive disruption of the market.

In a joint statement, the two companies pay a little empty lip service to the supposed "consumer benefits" of the deal, before promising to get back to upgrading their networks and competing:

"The prospect of combining with Sprint has been compelling for a variety of reasons, including the potential to create significant benefits for consumers and value for shareholders. However, we have been clear all along that a deal with anyone will have to result in superior long-term value for T-Mobile’s shareholders compared to our outstanding stand-alone performance and track record,” said John Legere, President and CEO of T-Mobile US, Inc. “Going forward, T-Mobile will continue disrupting this industry and bringing our proven Un-carrier strategy to more customers and new categories – ultimately redefining the mobile Internet as we know it. We’ve been out-growing this industry for the last 15 quarters, delivering outstanding value for shareholders, and driving significant change across wireless. We won’t stop now.”

The death of the deal is perhaps extra good news for T-Mobile CEO John Legere. Legere has spent the last few years fashioning himself as a massive consumer ally (except for that whole opposing net neutrality and mocking the EFF thing), dropping F-bombs, and making fun of AT&T and Verizon. Selling consumers on a deal all-but guaranteed to devastate sector jobs and price competition would have required some PR acrobatics that challenge the laws of physics.

The death of the deal is ironic, given that Sprint will not likely have a better chance at getting regulatory approval. Softbank and Sprint spent the better part of the year buttering up the Trump administration, going so far as to let Trump take credit for Softbank job promises he not only had absolutely nothing to do with, but which were announced months before Trump even became President. Given the rubber stamp nature of the current FCC, the chances of regulators doing the right thing and stopping the job and competition-killing deal were far from certain.

Fortunately for consumers, fussy international egos derailed the deal before regulators had a chance to downplay how bad a deal it actually was. Sprint can now turn its focus toward striking deals with other companies like Altice and Charter; deals that won't erode the overall level of competition in the wireless sector.

Filed Under: antitrust, competition, consolidation, fcc, mergers
Companies: deutsche telekom, softbank, sprint, t-mobile

FCC Boss Demolishes Media Ownership Rules In Massive Gift To Sinclair Broadcasting

from the the-big-get-bigger dept

FCC boss Ajit Pai has been busy ignoring the public while he kills popular net neutrality rules. But he's also been working hard to weaken broadband deployment standards to obfuscate a lack of broadband competition, to gut programs that provide broadband to the poor, killing previous FCC efforts to improve cable box competition, to protect prison telco monopolies from oversight, and to make it easier for business broadband monopolies to rip off smaller competitors. All while proclaiming to be a stalwart defender of the little guy and a champion for bridging the digital divide.

But Pai has also been taking heat for his pursuit of another pet project: gutting media consolidation and ownership rules solely for the benefit of Sinclair Broadcasting, which is seeking approval for its $3.9 billion bid for Tribune. In the last few months, Pai has, as promised, been "taking a weed whacker" to rules intended to protect local reporting, media competition, and opinion diversity. That has included killing an 80 year rule intended to protect local competitors and journalism from unchecked monopoly control of a market, and taking an axe to some protections but bringing back others solely to Sinclair's benefit:

"On Tuesday, the FCC eliminated a requirement for broadcasters to keep a local studio. A day later, Pai called for easing ownership restrictions, potentially taking pressure off Sinclair’s $3.9 billion deal for Tribune Media Co.’s TV stations. Earlier, he had restored an obsolete rule, making the deal possible. On Thursday, the agency moved toward blessing a new broadcasting standard that may enrich Sinclair as it offers viewers sharper pictures."

As he prepares to axe yet more media consolidation protections over the coming months, Pai has trotted out the growing power of Google and Facebook as partial justification for eliminating rules he declares no longer necessary:

"The marketplace today is nothing like it was in 1975. Newspapers are shutting down. Many radio and TV stations are struggling, especially in smaller and rural markets. Online competition for the collection and distribution of news is even greater than it ever was. And just two Internet companies [Google and Facebook] claimed 100 percent of recent online advertising growth. Indeed, their digital ad revenue alone this year will be greater than the market cap of the entire broadcasting industry. And yet the FCC's rules still presume that the market is defined entirely by pulp and rabbit ears."

Obviously the argument that "Google and Facebook are big" and therefore media consolidation rules are unnecessary doesn't hold a whole lot of water. And while it's true that many newspapers and local news outlets are "struggling," that's more a failure of adaptation than a justification for gutting media consolidation restrictions that still aid smaller, regional news outlets. Unsurprisingly, fellow FCC Commissioners like Jessica Rosenworcel have called for an investigation into Pai's giant, sloppy kiss to Sinclair:

"It has reached a point where all of our media policy decisions seem to be custom-built for this one company," Jessica Rosenworcel, a Democratic FCC member, said Wednesday at a congressional hearing. "It’s something that merits investigation.”

This mindless obsession with mergers and consolidation (with little thought as to the impact on markets or competition) has been a hallmark of the Trump administration. But opposition to this growth-for-growth's sake has been increasingly bipartisan in nature, with many smaller Conservative outlets worried they'll be unable to compete with giants like Comcast NBC Universal, Sinclair/Tribune, and soon AT&T Time Warner. Smaller organizations like the American Cable Association (ACA) applauded and supported Pai's rise to power, now seem surprised as his policies focus almost exclusively on aiding the biggest and wealthiest companies:

"ACA urges the Federal Communications Commission to deny the Sinclair-Tribune transaction because it would violate existing FCC rules while at the same timing failing to meet the obligation to demonstrate it would serve the public interest. Even if the transaction were not per se unlawful, it would create a broadcasting behemoth with unprecedented control over both the national and local television markets,” ACA President and CEO Matthew M. Polka said."

Whether it's gutting net neutrality solely for the benefit of a few giant ISPs, or gutting media consolidation rules exclusively to aid one giant media empire, Pai's legacy at the FCC will be one of brutal myopia, obfuscated by tall tales about his relentless dedication to the little guys he seems blatantly intent on ignoring.

Filed Under: ajit pai, competition, consolidation, fcc, media, media ownership
Companies: sinclair broadcasating

EMI Universal Deal Cleared, Giving One Company Veto Rights On Pretty Much Any New Music Service

from the well-that-could-be-a-problem dept

This isn't a huge surprise, but EU and US regulators both approved Universal Music's deal to buy EMI today. Under the terms from the EU, they will have to sell off some EMI assets, including the iconic Parlophone label. There is a part of me that thinks that the complaints against this deal are a bit overblown, seeing as it's about linking up two dinosaurs who've failed to adapt -- and bringing them together won't fix any of the major problems those two labels face. But there are some very real concerns about how this could impact innovation online. For better or for worse, setting up digital music services today requires doing deals with the major labels. If you're just doing webcasting (i.e., broadcast) there are agreed upon -- but insanely high -- rates you can use (more on that later today). However, if you're doing anything interactive or offering digital downloads, then you have to cut deals.

A story earlier this week at the Huffington Post, does a really nice job laying out how this deal effectively gives a few Universal Music execs veto power over any new music startup. Because if you're launching a music service today, you generally want it to offer a lot of popular music, and between Universal Music and EMI, they control a huge portion of that market -- much of it historical back catalog stuff, but also some of the more popular mega-acts today. The HuffPo writeup notes that Steve Jobs played the labels off of each other to get them to sign on to iTunes. But, today, the new UMG could control that process.

According to Paul Vidich, a former Warner Music executive who closed the iTunes deal, the pending merger between Universal and EMI could put an end to that state of affairs.

"Without a UMG-EMI license, they won't have a business," said Vidich, referring to new digital startups. "Within the new UMG-EMI there will be only a handful of senior executives who make these key licensing decisions. So this small group will become the gatekeepers for music startups that require these licenses. The psychology, pay packages and strategic interests of these executives will have an outsized impact on diversity and innovation in the entire online music industry."

Remember, Universal is the company whose former CEO, Doug Morris, once gleefully explained how he didn't understand technology and didn't even try to hire someone who did, because he wouldn't know how. Amazingly, his board let him keep his job for many years (he's since moved on to head up Sony Music). Morris' replacement at UMG, Lucian Grainge, has talked about how the CD format is important to the company's future. And he's now basically the guy with veto power over any new music service.

That does not bode well for the online digital music marketplace.

Filed Under: consolidation, digital music services, major labels, music
Companies: emi, riaa, universal music

EA Makes A Bid For Take Two: Soon You'll Be Able To Shoot John Madden In GTA

from the who-will-make-a-video-game-about-a-consolidating-market? dept

It really was only a matter of time after the announced ActiBlizsion merger that someone was going to make a bid for Take Two Interactive, makers of the super popular (if controversial) Grand Theft Auto series of video games. Given Activision and Blizzard are focusing on their own merger, it probably makes sense that industry leader EA has stepped up to make the Take Two bid. EA apparently tried to get Take Two's board to agree to a deal, but when it turned EA's offer down (at a rather large premium), EA decided to go directly to the shareholders in a hostile bid. Take Two claims that the current offer undervalues the company (despite being a 64% premium on the stock price) because it expects the company's stock to rise after it releases the next edition of GTA in the spring. Of course, aren't stock prices supposed to reflect that kind of thing already?

Filed Under: consolidation, video games
Companies: ea, take two