M & A's

Mergers and acquisitions !

I think nothing is more detrimental to our economic life than the concentration of business, of all types. Over the past two or three decades I have read or listened to many of the arguments for “bigness”. Global competitiveness, market access, etc. I don’t buy any of these arguments. However, those positions have prevailed over the current handicapped class of politicians.

Comcast wants to buy Time Warner. Comcast says, and apparently some of the National media accepts, the position that competitiveness will not be affected by the merger. But, competitiveness, even if true, is only part of the picture. There are only four major companies in the cable business, as consolidation has been going on for years. An active Justice Dept. and FCC, which regulates these “natural monopolies”, should be examining ways to break-up Comcast and Time Warner ! There is very little, if any, advantage to these media combines, and much disadvantage and negative consequences. Power goes with size, and it’s the power that the FCC needs to worry about with this merger.

It has been speculated that regulators will look at how content will be affected by such a large company. But, they should also be looking at innovation and change, as smaller companies, typically, are more noted for innovation.

The practical relationship of the regulators to these giant companies is more cozy and accommodating, rather than administrative or even unwilling. After all, employees for Federal regulatory agencies, have been known to leave the agencies and go to work for the companies they previously regulated !

One of the ironies, if it is an irony, is these business and trade monopolies don’t necessarily and proportionally re-invest profits !  Monopolies don’t need to innovate !  Look at the Detroit auto from the 1960’s to 1980’s. Monopolies use profits to buy things, like competitors, and the like. American corporations now have a 7 trillion stashed away to “buy things”.