Lots of stuff in monopoly-related news, as usual. First, a Super Bowl monopoly story. To buy a ticket near the end zone, it costs “$14,995 plus an additional $3,186.44 in Ticketmaster fees.”
This week, one of the more interesting stories is that Disney, Fox, and Warner are teaming up to create a streaming sports venture that will offer “one streaming package all the content those companies offer—from the NFL, NBA, NHL and MLB to college basketball and football,” which will comprise about “55% of U.S. sports rights.”
This move is clearly about leveraging the power that these firms have in the pay-TV world to the streaming market. Consumers are unsubscribing to pay-TV at 7% a year at this point, with live sports being the main anchor retaining customers, so how to transition sports to streaming is a key strategic question for the big networks. The price point will be somewhere between a standard cable package of $100/month and Netflix’s $16.99/month, and the idea is to provide convenience for consumers while presumably matching the financial firepower of big tech, which can pay large amounts for sports programming.
Live sports is massive. Last month, NBC paid $100 million for the rights to stream one single NFL game, the Dolphins-Chiefs matchup, generating a whopping 2.8 million subscribers to Peacock. So part of the deal here is an attempt of three networks to amplify their bargaining power vis-a-vis sports leagues, who control must-have content that people will buy. As the Economist put it, “If Disney, WBD and Fox bid jointly, they could rein in the price inflation that leagues now demand.”
I find this interesting for two reasons. First, legally, a joint venture is treated like a merger, so the hurdle here is whether this combination violates the Clayton Act, which is whether its effect ‘may be substantially to lessen competition, or to tend to create a monopoly’ in any line of business. The players here are sophisticated and capable of lobbying and litigating if they choose. The case against this joint venture is that there will be fewer bidders for sports programming, and thus less revenue for the leagues who are selling rights. The case for it is that it’s possible to enter the sports streaming market, and that a combined streaming product is sufficiently valuable to consumers that the aggregate amount they will get paid is higher than it would be otherwise. There could be less competition, but not that much less.
Honestly, at first glance, this joint venture strikes me as likely unlawful. I just don’t see how you can pull two big bidders out of a market and with a straight face argue that there’s the same amount of competition. But I also don’t care that much, because these are sophisticated players who can litigate if they choose. Will the NFL or NBA look at this joint venture and conclude it will get less revenue because there are fewer bidders? Who knows? The harm will likely hit smaller and newer sports trying to get distribution.
What I do find interesting here is that it shows there is a desire to consolidate the streaming experience for consumers, but that it is possible to do it without merging the studios. Indeed, Disney, Fox, and Warner are creating a separate independent sports distributor, and then de facto selling their sports content to it. If you eventually divested that distributor from the three of them, there’s no reason you couldn’t have multiple distributors, and a much healthier streaming market. In a sense, by attempting to unlawfully aggregate bargaining, the studios have accidentally shown us the path to a better market structure.
And now, the good and bad news of the week.
Good News
58,000 Ford workers are getting bonus checks of up to $10,400 as part of the profit-sharing arrangement they won during their strike. Relatedly, the UAW got a majority of workers at a Volkswagen plant in Tennessee to sign up to unionize.
A startup found a way to churn out cheap insulin using bacteria.
Secretary of Transportation Pete Buttigieg is seeking to get rid of predatory towing fees for truckers.
Colorado is now the ninth state with active legislation to ban junk fees. Virginia introduced one. And New York introduced one as well, from the terrific Senate leader Mike Gianaris.
Spirit Airlines CEO Ted Christie is starting the discussion on the need to re-regulate the airline industry. He does so in a bitter way, bashing the government’s choice to bring the antitrust case. “The law of unintended consequences is in full effect—either through direct government intervention, or lack thereof,” he said. “The end result has been to perpetuate a small group of ‘haves’ that control the market at the expense of the ‘have-nots’ and the American consumer.” It’s a bitter comment, but the answer is regulating the airlines. And he knows it.
The Ultimate Fighting Championship antitrust trial starts on April 15.
Gerber and Perrigo will have to face an antitrust suit over infant formula.
A new and important paper on how to make sure that the public money going to semiconductor subsidies actually leads to healthy domestic production.
Boeing workers are going to demand a 40% raise and a management that lets them build planes that work. They haven’t gotten a raise in ten years.
Arm Holdings, a semiconductor firm, surged by 56% on one day alone this week. FTC Chair Lina Khan blocked the Nvidia-Arm merger in 2022. Now Nvidia is a $1T+ company and Arm is surging…
Biden criticizes ‘shrinkflation,’ the way that big corporations surreptitiously hike prices.
There’s a class action suit against Amazon for showing commercials in Prime video.
The judge overseeing the FTC’s lawsuit against Amazon says that the request by the e-commerce giant to only have 10 depositions was ‘comically low.’ The bad news is that the trial will be in December of 2026.
Taylor Swift is popular among Chinese women tired of Xi Jinping’s conservative politics.
The Federal Trade Commission obtained a $195 million judgment and a permanent ban on telemarketing and selling healthcare products against Simple Health and its CEO Steven J. Dorfman over charges it sold sham health insurance. The firm’s assets will be liquidated and refunded to consumers.
Snoop Dogg and Master P are suing Post Holdings for working with Walmart to block their new cereal products from getting access to distribution.
There’s a class action suit against Johnson and Johnson for stealing from its own employees via drug spending. It’s a complex scheme, but essentially J&J is forcing its workers to buy prescription drugs at a high price, and then taking kickbacks. A lot of big employers do this.
A very fun back-and-forth as Rana Foroohar in the FT calls bullshit on EU antitrust enforcers. Olivier Guersent, one of the endless drones in the belly of their bureaucracies, responds angrily.
The Antitrust Division is investigating the merger of Alaska Airlines and Hawaiian Air.
The National Labor Relations Board got an employer to eliminate all of its non-compete agreements.
TikTok lost its challenge to its designation as a ‘gatekeeper’ under Europe’s Digital Markets Act. So it will have to comply with the law, meaning… I’m not totally sure.
The Canadian competition authorities are investigating the use of restrictive property clauses for grocery stores. They’ve got new laws, they are now using them.
Microsoft admits the FTC was right about its plans to run Activision as part of its games division, and not allow it to keep its independence.
The IRS is going to bring in hundreds of billions more than expected from wealthy tax cheats due to increased funding.
The government posted its initial results from its Boeing investigation. The door was missing bolts.
India is giving Tower Semiconductor $4 billion to build an $8 billion fabrication plant.
Bad News
Wisconsin Representative Mike Gallagher won’t run for reelection. That’s too bad, he was very good.
Diamondback and Endeavor are discussing merging in a $50 billion deal, as more oil and gas consolidation in the Permian Basin happens.
A really ugly story on how the Clinton-era Federal Trade Commission cut a secret deal with funeral parlors to let them secretly scam people and hide it.
Nvidia, one of the ‘Magnificent Seven’ trillion dollar stocks, has a whiff of Ponzi about it. It’s a semiconductor monopolist in the AI chip segment, but some of its sales are to startups that Nvidia itself is funding.
Google got a class action antitrust case in California dismissed that is similar to the one the Federal government has going in D.C.
Turns out the devices with the new weight-loss drugs in them all have illegally listed patents.
Saudi Arabia is giving dealmakers an excuse to ignore U.S. subpoenas, saying that if they turn over documents on the LIV Golf proposed merger they will be put in prison. McKinsey, Boston Consulting Group, Teneo, and investment banker Michael Klein are involved in withholding documents at the behest of the kingdom. I am not liking this disrespect of the American legal system.
Dakota Johnson says the environment for making risky pictures in Hollywood is ‘bleak.’
Apple is now lobbying *against* right-to-repair laws, six months after saying they’d lobby for it.
Warner killed the movie Coyote vs ACMEfor tax benefits, apparently. It’s a very weird story, a great movie that executives didn’t bother to watch, let alone release.
Apple is not only refusing to comply with Europe’s DMA, but is actually going to downgrade the experience of iPhone users in Europe vs the rest of the world. It has a Progressive Web Apps feature that allows app makers to sort of get around the app store and write apps using web standards. It’s not great, but it works for some things. In Europe, they are removing that capability.
You really need to have links to when you do interviews with journalists like Glenn Greenwald or have segments in Breaking Points. Maybe just a link in Notes would do it.
Hey Matt excellent roundup. I will say the sports thing sounds like a big attack on consumers and probably will be a premium price especially with NFL paying peacock $100 million dollars. You’re right about the coyote vs acme movie. It’s weird but this is why WB and other film studios need to be broken up. It sounded like a “who framed Roger rabbit” type movie which won’t get made in today’s era especially with the risk/cost.
“I am not liking this disrespect of the American legal system.”
The American legal system is not always worthy of respect. Look at the way Mr. Donziger was jailed at the behest of Chevron and how the indigenous people of Ecuador screwed over as a consequence. Or how the people of Bhopal lost in probably the worst industrial disaster ever as a result of the leak of cyanide like gases from the Union Carbide plant
This may be early or premature, but suppose Biden loses and Trump comes in and ushers back in the monopolists... what can we do to keep the momentum going for the anti trust (New Brandeis) movement going? Votes only go so far and an support for monopoly crackdowns will need to be maintained. Would you, Lee or anybody else be able to provide a checklist or things we can do? I generally try to be as informative as I can in my own social circles, but that only goes so far.
Offhand, if you hop over to Youtube, there are now *countless* videos shitting all over Boeing. This is frankly great to see because the added pressures will finally get the message thru to the senior management and shareholder base that its time to clean house and let the aerospace engineers run the place again.
One tweet that I happened to like about all of this: "Airbus is staffed by Europeans for whom being an engineer at airbus is one of the best jobs you can get. Boeing is staffed by Americans for whom working at Boeing is something you do because you can’t get a better paying job with a tech company."
RE: The Rana Foroohar piece...the Europeans cling to an antitrust philosophy—consumer welfare based on pricing—that is being rejected in the U.S., which is the country that birthed and bred it but is now rejecting it after more than 50 years of corporate consolidation over most industries and the massing of huge political power. I have to ask: what are the incentives behind the European rejection of a new, more aggressive and more successful approach? Perhaps an issue for another one of Ms. Foroohar’s awesome columns?
is there any sector that isn't monopolized or financialized (PE ownership)? Remember when a billionaire was a big thing? How is it possibly ethical for an individual, in any bastardized version of a democracy, to be a billionaire, let alone own hundreds of billions? It's a zero-sum game. ALL of those billions are sucked up from citizens and it's happening at a faster rate while we work more to try to pay for healthcare and one-day, dream to payoff debt. We need a 21st century term for serfdom. Capitalism.
As a lead on industry consolidation, it looks like private equity is getting its claws into US Accounting Firms. The firms were consolidating with each other like mad over the past couple decades, but they're running out of practices to buy (note: it's a much longer comment on the state of the profession where old partners are aging out and there's very little new blood).
In 2021, TowerBrook Capital Partners purchased majority ownership in EisnerAmper, LLP. In April 2022, New Mountain Capital purchased a majority ownership in Citrin Cooperman. In June 2022, Parthenon Capital purchased the consulting practice of Cherry Bekaert, LLP. In these three cases, the firms split the attest and non-attest practices into separate companies. All are (or were) Top 25 accounting firms by revenue. (https://www.journalofaccountancy.com/news/2022/jun/cherry-bekaert-private-equity-investment.html)
Back in Aug 2023, BDO (#6 by revenue) took a $1.3B debt deal from Apollo Global Management to fund an Employee Stock Ownership Plan (ESOP). Partners took a huge windfall and saddled the firm with debt (probably at a high interest rate) under the guise of offering an opportunity for employees to make a tax-deductible investment in the firm. (https://www.ft.com/content/78f60830-57a2-4671-b3dd-d3c3fed8c24f)
Last week, Hellman & Friedman and Valeas bought just over 50% stake in Baker Tilly (#10 by revenue) for about $1B. Quoting a partner at H&F in the Financial Times, "[the sector] has a great track record of organic growth, maybe two down years in 30, and the down years are hardly down... There's an opportunity to consolidate the industry." The FT article suggests PE firms are gearing up for further consolidation in the future. About two weeks before the deal was announced, the board of partners at Baker Tilly pushed out their CEO. (https://www.ft.com/content/ca7d9384-7255-4b43-a84e-01a8b48b232d)
Guess a monopoly sports streaming service is the next logical step after the fall of the Paramount decree separating studios and theaters. To make this approach to live TV sports work for society, the streamers would need to be independent of the content providers and compete on the quantity and quality of the sports content provided. Much like the old post-Paramount theaters, streamers would have roughly equal access to content, pay providers accordingly, perhaps on a per-view basis. Consumers would then have choices and likely see whatever they wanted. Most excess rent would be naturally wrung out of the system.
i see the super bowl as poster boy of how corrupt everything boldly is today
for a very long time, pro sports avoided vegas, like the plague. even the suggestion of corruption.
now, I think all stadiums have sports books on site. and the super bowl played in vegas.
LMAO
fake bread and circuses win!
idocracy. celebrity deathmatch, claymation politics, claymation sports and monster betting
meanwhile, insiders steal whatever is left.
this excerpt from a Adam Curtis BBC documentary, resonates hard. ignore the local aspects, and see the trend:
“But then a technologist emerged who went much further. And his ideas would become central to… power
He was called Vladislav Surkov.
Surkov came originally from the theatre world and those who have studied his career
say that what he did was take avant-garde ideas from the theatre, and bring them into the heart of politics.
Surkov's aim was not just to manipulate people, but to go deeper and play with, and undermine,
their very perception of the world so, they are never sure what is really happening.
Surkov turned … politics into a bewildering, constantly changing piece of theatre.
He used (gov) money to sponsor all kinds of groups - from mass anti-fascist youth organizations,
to the very opposite - neo-Nazi skinheads. And liberal human rights groups who then attacked the government.
Surkov even backed whole political parties that were opposed to the (president).
But the key thing was that Surkov then let it be known that this was what he was doing. Which meant that no-one was sure what was real or what was fake in modern (politics).
As one journalist put it, "It's a strategy of power that keeps any opposition "constantly confused” - a ceaseless shape-shifting that is unstoppable "because it is indefinable."
Meanwhile, real power was elsewhere - hidden away behind the stage, exercised without anyone seeing it.
And then the same thing seemed to start happening in the West.”
Excerpt from the transcript of “HyperNormalisation” by A. Curtis 2016
You really need to have links to when you do interviews with journalists like Glenn Greenwald or have segments in Breaking Points. Maybe just a link in Notes would do it.
Hey Matt excellent roundup. I will say the sports thing sounds like a big attack on consumers and probably will be a premium price especially with NFL paying peacock $100 million dollars. You’re right about the coyote vs acme movie. It’s weird but this is why WB and other film studios need to be broken up. It sounded like a “who framed Roger rabbit” type movie which won’t get made in today’s era especially with the risk/cost.
“I am not liking this disrespect of the American legal system.”
The American legal system is not always worthy of respect. Look at the way Mr. Donziger was jailed at the behest of Chevron and how the indigenous people of Ecuador screwed over as a consequence. Or how the people of Bhopal lost in probably the worst industrial disaster ever as a result of the leak of cyanide like gases from the Union Carbide plant
This may be early or premature, but suppose Biden loses and Trump comes in and ushers back in the monopolists... what can we do to keep the momentum going for the anti trust (New Brandeis) movement going? Votes only go so far and an support for monopoly crackdowns will need to be maintained. Would you, Lee or anybody else be able to provide a checklist or things we can do? I generally try to be as informative as I can in my own social circles, but that only goes so far.
Offhand, if you hop over to Youtube, there are now *countless* videos shitting all over Boeing. This is frankly great to see because the added pressures will finally get the message thru to the senior management and shareholder base that its time to clean house and let the aerospace engineers run the place again.
One tweet that I happened to like about all of this: "Airbus is staffed by Europeans for whom being an engineer at airbus is one of the best jobs you can get. Boeing is staffed by Americans for whom working at Boeing is something you do because you can’t get a better paying job with a tech company."
https://x.com/constans/status/1747710225765818457?s=46
Super bowl became a legal racket. And viewers are so happy to indulge. Funny
RE: The Rana Foroohar piece...the Europeans cling to an antitrust philosophy—consumer welfare based on pricing—that is being rejected in the U.S., which is the country that birthed and bred it but is now rejecting it after more than 50 years of corporate consolidation over most industries and the massing of huge political power. I have to ask: what are the incentives behind the European rejection of a new, more aggressive and more successful approach? Perhaps an issue for another one of Ms. Foroohar’s awesome columns?
is there any sector that isn't monopolized or financialized (PE ownership)? Remember when a billionaire was a big thing? How is it possibly ethical for an individual, in any bastardized version of a democracy, to be a billionaire, let alone own hundreds of billions? It's a zero-sum game. ALL of those billions are sucked up from citizens and it's happening at a faster rate while we work more to try to pay for healthcare and one-day, dream to payoff debt. We need a 21st century term for serfdom. Capitalism.
Re. employers taking kickbacks ... *cough* ... Amex kicks back $$$ to employers who force employees to use them for work expenses ... *cough*
Matt,
As a lead on industry consolidation, it looks like private equity is getting its claws into US Accounting Firms. The firms were consolidating with each other like mad over the past couple decades, but they're running out of practices to buy (note: it's a much longer comment on the state of the profession where old partners are aging out and there's very little new blood).
In 2021, TowerBrook Capital Partners purchased majority ownership in EisnerAmper, LLP. In April 2022, New Mountain Capital purchased a majority ownership in Citrin Cooperman. In June 2022, Parthenon Capital purchased the consulting practice of Cherry Bekaert, LLP. In these three cases, the firms split the attest and non-attest practices into separate companies. All are (or were) Top 25 accounting firms by revenue. (https://www.journalofaccountancy.com/news/2022/jun/cherry-bekaert-private-equity-investment.html)
Back in Aug 2023, BDO (#6 by revenue) took a $1.3B debt deal from Apollo Global Management to fund an Employee Stock Ownership Plan (ESOP). Partners took a huge windfall and saddled the firm with debt (probably at a high interest rate) under the guise of offering an opportunity for employees to make a tax-deductible investment in the firm. (https://www.ft.com/content/78f60830-57a2-4671-b3dd-d3c3fed8c24f)
Last week, Hellman & Friedman and Valeas bought just over 50% stake in Baker Tilly (#10 by revenue) for about $1B. Quoting a partner at H&F in the Financial Times, "[the sector] has a great track record of organic growth, maybe two down years in 30, and the down years are hardly down... There's an opportunity to consolidate the industry." The FT article suggests PE firms are gearing up for further consolidation in the future. About two weeks before the deal was announced, the board of partners at Baker Tilly pushed out their CEO. (https://www.ft.com/content/ca7d9384-7255-4b43-a84e-01a8b48b232d)
Guess a monopoly sports streaming service is the next logical step after the fall of the Paramount decree separating studios and theaters. To make this approach to live TV sports work for society, the streamers would need to be independent of the content providers and compete on the quantity and quality of the sports content provided. Much like the old post-Paramount theaters, streamers would have roughly equal access to content, pay providers accordingly, perhaps on a per-view basis. Consumers would then have choices and likely see whatever they wanted. Most excess rent would be naturally wrung out of the system.
Innovation held hostage to greed is a big part of the Pharma playbook.
i see the super bowl as poster boy of how corrupt everything boldly is today
for a very long time, pro sports avoided vegas, like the plague. even the suggestion of corruption.
now, I think all stadiums have sports books on site. and the super bowl played in vegas.
LMAO
fake bread and circuses win!
idocracy. celebrity deathmatch, claymation politics, claymation sports and monster betting
meanwhile, insiders steal whatever is left.
this excerpt from a Adam Curtis BBC documentary, resonates hard. ignore the local aspects, and see the trend:
“But then a technologist emerged who went much further. And his ideas would become central to… power
He was called Vladislav Surkov.
Surkov came originally from the theatre world and those who have studied his career
say that what he did was take avant-garde ideas from the theatre, and bring them into the heart of politics.
Surkov's aim was not just to manipulate people, but to go deeper and play with, and undermine,
their very perception of the world so, they are never sure what is really happening.
Surkov turned … politics into a bewildering, constantly changing piece of theatre.
He used (gov) money to sponsor all kinds of groups - from mass anti-fascist youth organizations,
to the very opposite - neo-Nazi skinheads. And liberal human rights groups who then attacked the government.
Surkov even backed whole political parties that were opposed to the (president).
But the key thing was that Surkov then let it be known that this was what he was doing. Which meant that no-one was sure what was real or what was fake in modern (politics).
As one journalist put it, "It's a strategy of power that keeps any opposition "constantly confused” - a ceaseless shape-shifting that is unstoppable "because it is indefinable."
Meanwhile, real power was elsewhere - hidden away behind the stage, exercised without anyone seeing it.
And then the same thing seemed to start happening in the West.”
Excerpt from the transcript of “HyperNormalisation” by A. Curtis 2016
https://www.scripts.com/script-pdf/10432
[some edits to strip specific gov reference, to emphasize global impacts, by (me)]
youtube link to this section https://youtu.be/fh2cDKyFdyU?t=8614