America's weak regulatory system presents MERGER MANIA: A dystopian thriller about corporate dominance of the internet.
Encouraged by this week’s AT&T court victory, Comcast has announced a $65 billion all cash offer for 21st Century Fox’s TV and studio assets. The company’s bid puts it on a collision course with Disney’s own efforts to acquire Fox, and also heralds a new era of merger and acquisition mania where consumer welfare and competition is proving to be a distant afterthought.
In a statement, Comcast said the company’s bid was a notable step up from Walt Disney’s existing $52.4 billion offer, setting up a showdown between two companies that have had a contentious relationship ever since Disney rebuked Comcast’s $54 billion hostile takeover attempt back in 2004.
Comcast’s deal would include the FX cable network, a large number of lucrative regional sports networks, and a stake in British pay TV operator Sky, but would exclude Fox Sports, Fox News, and Fox Broadcasting, which would remain under the Fox ownership umbrella. The acquired Fox assets would then be fused to the NBC Universal properties Comcast acquired in 2011.
“We have long admired what the Murdoch family has built at Twenty-First Century Fox,” Comcast CEO Brian Roberts wrote in a public letter to the Murdoch family. “After our meetings last year, we came away convinced that the 21CF businesses to be sold are highly complementary to ours, and that our company would be the right strategic home for them.”
Comcast this week stated the company was holding off on its bid for Fox until it knew the outcome of AT&T’s legal showdown with the DOJ. With AT&T securing such a monumental court victory, Comcast is now confident that the precedent set means the DOJ is less likely than ever to seriously challenge major mergers in the media and telecom space.
The question then becomes what conditions could be affixed to the deal to offset the potential harm from letting Comcast grow even more powerful. It’s abundantly clear that the Ajit Pai FCC will likely rubber stamp the merger, leaving potential DOJ conditions as the wild card.
Comcast’s track record on adhering to merger conditions isn’t particularly good, a major reason Obama-era regulators balked at the company’s attempted acquisition of Time Warner Cable back in 2014. Investigators found the company routinely misled regulators and failed to adhere to numerous conditions affixed to the NBC deal, several of which Comcast itself volunteered.
As growth in the broadband and cable TV market flatlines, companies like AT&T, Verizon and Comcast have increasingly pushed their way into broadcasting and online advertising. ISP executives are terrified of being “dumb pipe” providers focused exclusively on broadband, and are particularly eager to challenge Google and Facebook in the online ad space.
But these companies’ monopoly domination over both the conduit to the home and the content flowing over it—continue to raise anti-competitive questions the country’s antitrust laws are ill-equipped to handle. Especially as these giants spend millions of dollars annually to erode state and federal oversight of some of the least-liked companies in America.
Combined with the death of net neutrality, the U.S. is creating a very uncertain future where a handful of companies now dominate everything from local sports and news broadcasts to broadband, with few rules or guidelines preventing price gouging, predatory practices, and routinely anti-competitive behavior.