Problems in achieving the merger
Essentially the critics presented 2 arguments against the acquisition of NBC universal by Comcast. Firstly they proposed the competitive harm from a Vertical Transaction. A vertical merger can harm competition by facilitating exclusion or collusion. Free Press argued that Comcast’s collaborative effort with NBC would stifle competition in online video (TV Everywhere model) by restricting where, the vast amount of “must-see” NBC-owned content can be offered, and charge higher rates to television providers for accessing NBC-owned networks. Thus rising to the level of an antitrust violation by way of intentionally discouraging competition and acting as concierge to content on the Web.
Second argument was that Comcast
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There was an apprehension that if Department Of Justice opposed the deal then Comcast would have had to fight a lawsuit aimed at blocking the acquisition. This would have led to abandoning its proposed merger, almost similarly as AT&T surrendered its efforts to buy T-Mobile in 2011 when regulators signaled they would block that deal.
Forsaking its bid to acquire NBCU from Time Warner Cable, however, would have been a enormous setback for Comcast and would have ended a potential boom period for telecom consolidation.
The transaction under the review by department of justice forged a uniquely vertically integrated media and entertainment company that aimed at controlling both the largest cable programming distribution network in the US and one of the largest creators of television programming and feature films in the US. The primary concern of the antitrust attorneys was related to the vertical issues, as horizontally both parties were aligned and were contributing programming assets to the venture. The issue revolved around the effect on competition caused by the ownership of a significant programming content partner by a large cable
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The integrated firm would enable Comcast to deter the development of Hulu’s business by hampering major strategic actions. There was an impeding threat from Comcast to significantly stifle the OVDs in their nascent stages of business, before they even have a chance to be able to become significant competitors to Comcast.
2. The already existing competitive MVPDs (Multichannel Video Programming Distributors) were also on the edge of being adversely affected by the transaction. When NBCU was a under GE, it had greater incentive to make its “most wanted” content available in maximum ways (cable, satellite, online) so as to increase its licensing fees and achieve greater advertising revenues. But with the Joint venture in place, this incentive would be replaced by the profit maximizing strategy of withholding important content with rivals or charge extra/ premium super competitive fees from them.
Dept. of Justice issued its consent decree almost in sync with the FCCs order of approval. The FCCs conditions took the case of MVPDs remedies in detail, with proving for arbitration process. So DOJ focused on the OVDs
In December 2009, Comcast announced its intent to acquire a majority stake in the media conglomerate NBC Universal from General Electronic. “our decision to acquire GE’s ownership is driven by our sense of optimism for the future prospects of NBC universals and our desire to capture future value that we hope to create for our shareholders” says Comcast CEO Brian Roberts( 2009): The planned acquisition was scrutinized by activists and government officials; their concerns primarily was the potential effects of the vertical integration that the acquisition could create, as Comcast is also greatly involved in cable television and internet services in a vast amount of the media markets.
Michael Parenti (2002) declares media in the United States is no longer “free, independent, neutral and objective.” (p. 60). Throughout his statement, Parenti expresses that media is controlled by large corporations, leaving smaller conglomerates unable to compete. The Telecommunications Act, passed in 1996, restricted “a single company to own television stations serving more than one-third of the U.S. public,” but is now overruled by greater corporations. (p. 61). In his opinion, Parenti reveals that media owners do not allow the publishing of stories that are not beneficial and advantageous. Parenti supports his argument very thoroughly by stating how the plutocracy takes control over media in multiple ways: television, magazines, news/radio broadcasting, and other sources.
Robert Zimmerman, the senior vice president of business development, for American Cable Communications (ACC) was in the process of looking for a potential acquisition target for ACC. In December 2007, Zimmerman remember a presentation that was made recently by Rubinstein & Ross (R&R). R&R was a boutique investment bank that was well known for doing deals in the media and telecommunications area. During this presentation it was suggested that ACC buy out AirThread Connections (AirThread) which is a large regional cellular provider. The current industry of these companies were moving more toward bundled service offerings and by adding AirThread it would help ACC cover an area of service it does not currently offer. In order to determine if the acquisition should be done an analysis needs to be done.
...ns especially when it came to deregulating the telecommunications industry. The new law was expected to bring radical changes to the communications industry, providing high quality services to the masses at minimal cost. The act was also designed with the specific purpose of ensuring that advanced telecommunications will be available to every citizen as part of the policy for universal service. The FCC and the states, as the regulatory bodies, implement the law. Its been over three years since the law was passed and most critics have claimed that nothing worthwhile came out of the act besides the mergers of course. Ultimately however, the services brought to the public will depend on the providers of those services and their success in the marketplace.
After watching Charlie Rose’s interview with Jim Collins; where Collins explains his recent book How the Mighty Fall, presented me with an opportunity to reflect over recent companies that were staples in my childhood and early adult memories and now are non-existent. In this paper, I will look, analyze and relate Blockbuster Video and their history to Jim Collins’ five stages of an organization.
The proposed merger between Comcast and Time Warner Cable would make it the largest provider of cable in America and give it unprecedented market power and allow it to continue to pursue profits and the cost of consumers. While it would not be a monopoly, it would be giving the company dangerous power. Already Comcast has control of one of the largest media providers in America, NBC. It has significant control of internet as well, and has made Netflix pay Comcast to have faster speeds. The question now isn’t if the merger will be bad for business, it is if the United States government will make the right choice for
Years later, the Telecommunication Act of 1996 triggered dramatic changes in the competitive landscape. SBC Communications Inc. established itself as a global communications provider by acquiring Pacific Telesis Group and becoming the new AT&T. The merger of AT& T and BellSouth, along with the ownership consolidation of Cingular Wireless and YELLOWPAGES.COM, will speed convergence, competition and continued innovation in the communications and entertainment industry, creating new solutions for consumers and businesses and positioned to lead the industry in one of its most signifi...
“the most prominent pro-competitive effect of a vertical integration is the elimination of pre-merger double marginalization which arises when both the upstream and downstream markets exhibit some degree of economic market power, and thus firms at each level mark up their prices above marginal cost” (Meyer and Wang, 2011).
The year is 1952 and a young John Rigas purchased a cable company for a mere $300 in Coudersport, Pennsylvania with high hopes of building the company into a successful family owned and operated business (AICPA, 2005, para. 3); a business that would remain unparallel to the rest of its competition. In the late 1990s his dreams came to fruition; John Rigas, along with a few close family members and investors, purchased Century Communications for $5.2 billion and merged the companies together becoming the 6th largest cable company serving more than 5.6 million subscribers (AICPA, 2005, para. 4). Ensuring that the majority of Adelphia’s voting stock and control of the board remained in the hands of f...
Growing from a small provider of a few thousand, the company has grown to be a massive conglomerate encompassing far greater than simply cable services. Now owning NBC Universal, Comcast exerts great power within the market, employing a variety of strategies to expand itself and remain profitable. When it attempted to merge with Time Warner cable, several strongly opposed when considering the massive power it already possessed. In addition, growing sentiment against cable providers has resulted in the reduction of subscribers. Despite this, Comcast is in a high period of expansion within the business cycle. However, it should remain cautious of the changing environment of how consumers obtain television
On December 14, 2000, the Federal Trade Commission approved the planned merger of AOL and Time Warner after both companies pledged to “protect consumer choice” both now and in the future. The AOL Time Warner merger was approved by the Federal Communications Commission on January 11, 2001, and is the biggest merger in corporate history, then estimated at a total market value of $350 billion. The merger created a ‘powerhouse’ of new and traditional media. AOL Time Warner has led the union of the media, entertainment, communications and Internet industries. Throughout the years the face of media and entertainment industries has changed drastically as a result of increased technology. The popularity of newspapers gave way to other forms of media and entertainment such as magazines, television, cable, music, and most recently the Internet.
The twenty year journey of Blockbuster has not been without bumps, valleys, road blocks, and detours. Blockbuster has come under legal fire from Netflix, a major online competitor, the Free Trade Commission for attempting a host...
In the early 1970s, the FCC continued it's restrictive policies by enacting regulations that limited the ability of cable operators to offer movies, sporting events, and syndicated programming. The freeze on cable's development lasted until 1972, when a policy of gradual cable deregulation led to, among other things, modified restrictions on the importation of distant signals.
In fact, some of the biggest threats to the company’s growth are the government’s regulation that increases the risk to the underlying business. In addition, the risk of losing the exclusive contract for the iPhone would be a major loss for AT&T. Most of the consumers choose AT&T because of their exclusive contract for the iPhone. Hence, this loss of business will significantly influence the AT&T's profitability and revenue. Moreover, the antitrust authorities play an important role on approved the merger of AT&T.
In an interview in 2010, Case describes the merger as “a good idea, but the execution of it wasn’t what it needed to be.” (Arango, 2010). In the same interview, Levin blamed the internet for the failed merger in his response: “I now, upon reflection believe that the transaction was undone by the Internet itself. I think it’s something that no one could have foreseen” and that with internet “all the old business plans are out the window” (Arango,