Barring a sudden outbreak of good sense, the Federal Communications Commission (FCC) and the Department of Justice will give John Malone’s $55bn (£37bn) bid for Time Warner Cable (TWC) the green light. It will make the 74-year-old cable guru several billion dollars richer, but TWC’s customers might rightly ask what’s in it for them. Not a lot, most likely.
In fact, it looks highly unlikely that regulators will block the deal – why would Mr Malone’s Charter Communications guarantee TWC a $2bn termination fee if it didn’t have a pretty good idea that wasn’t going to happen? Besides, TWC was so desperate to get bought, it would probably have accepted a stock-only bid from Napster.
The veteran consumer advocate Ralph Nader was on TV this week complaining about the deal, and his critique was spot-on – that the FCC appears to have given Mr Malone a wink and that he has debt-financed growth at the expense of competition, consumer benefit and good business practice. It almost made me want to forgive Mr Nader for handing the 2000 presidential election to George W Bush. Almost.
TWC and its larger rival Comcast regularly make it on to lists of “America’s most despised companies”, or words to that effect, mainly because their customer service makes you wonder if they know what either word means. I know from bitter experience. To improve TWC’s service will require significant investment in people – something that companies run by Mr Malone have never been particularly enthusiastic about.
Charter regularly competes with Comcast and TWC for “worst cable company” status – some feat when it has 5 million customers against Comcast’s 27 million and TWC’s 23 million. Just imagine how awful it could be if they all got together.
Here’s the longer-term view, though: none of it might matter. The whole cable and telecoms industry is chasing the famed “quad play” of broadband, wireless, TV and telephone. But more and more people are ditching traditional TV in favour of streaming services like Netflix and Amazon. Meanwhile, who needs a landline nowadays?
Increasingly, quad play is really a double play on wireless and broadband, and TV power is going to keep moving towards broadband and content providers – the Amazons, HBOs and ESPNs. Are these businesses going to happily rely on the service provided by the likes of TWC and Comcast? Not if they can help it.
That is not to say the death of cable is imminent. It’s not, and this deal will give Charter and Mr Malone serious clout. The issue is whether or not that clout is going to be worth anything like $55bn in 10 years’ time, and my guess is probably not.
Google Fiber is also on the horizon, rolling out its own, ultra-high speed broadband. And while it may only be in a couple of small markets now, by the end of the year it will be available in cities such as Nashville and Atlanta. If Mr Malone really wanted long-term influence, he would have invested $55bn in Google Fiber, not TWC. Of course, it’s not really about long-term investment – it never really is with Mr Malone. It’s about using cheap leverage to buy and buy. And if the FCC is willing to indulge him, American consumers are in for a rough ride.
Blame everyone but me: another Dick is in denial
Unlike that other Dick – Cheney – the former Lehman chief executive Dick Fuld has had the decency to remain publicly silent since his fall from grace. Until now. Like the other Dick, it turns out Mr Fuld is convinced that everything is everyone’s fault but his. What is it about people called Dick?
This week Mr Fuld made his first speech since the fall of Lehman at the Marcum MicroCap Conference – a New York get-together for people who invest in small-cap stocks. The speech itself was rather bizarre: clearly out of practice and nervous, Mr Fuld rambled, at times almost incoherently. Seven or eight years to reflect on the demise of Lehman hasn’t left him a remorseful or humbled man. “Lehman Brothers at the point of 2008 was not a bankrupt company,” he said. Deluded, not humbled.
In a way you have to admire the balls of people like Dick Fuld. A guilty party in a Wall Street meltdown and subsequent recession that resulted in millions of lost jobs and homes, and all he could prattle on about was how great a company Lehman was. He even had the chutzpah to mention President Obama, although not by name – “we need new leadership” – taking a leaf out of the other Dick’s playbook. Shameless.
“We had 27,000 risk managers,” he said, the implication being that Lehman couldn’t possibly be at fault when all of its employees had an interest in making sure it did nothing wrong. What nonsense; Lehman had 27,000 employees looking out for number one: max the annual bonus and to hell with everything else. It’s a culture that still prevails and will one day result in another crash. One that again will be everyone else’s fault.
American prosecutors should clean up their own sports too
Let’s agree on one thing first: Sepp Blatter and his cronies at Fifa have had it coming for years. I live in Kentucky – and everyone in Kentucky knows that Fifa is more bent than a David Beckham free kick, even if they don’t know what a free kick is.
That money has been changing hands illegally, apparently with the help of banks and sponsors (well, how else is $150m going to change hands?), is a surprise to nobody. With any luck the people involved face the prospect of personal ruin and lengthy prison sentences. The banks and sponsors involved … well let’s just say that outcome is less likely.
It is not surprising it was Americans who ended up being responsible for the raids and arrests, and the new US Attorney General Loretta Lynch deserves plaudits for going where European prosecutors feared to tread. Maybe the European prosecutors will start arresting Wall Street executives, creating the sort of Transatlantic pact we can all rally behind.
But as the film director Kevin Smith once wrote: “There are few things in life more satisfying than pointing out the shortcomings of others.” That’s why Americans are so good at it. They need to see corruption tackled abroad – and nothing is more abroad than “soccer” –because it reinforces the belief that their own values and institutions are superior. Absolute poppycock, of course.
American sports are run on exploitation of poor athletes and extortion of taxpayers. Franchises owned by billionaires routinely blackmail their host cities in exchange for new stadiums. The NFL, the most successful national sports league on the planet, is run as a charity and pays no tax.
The college system, a petri dish of corruption, generates billions of dollars per year in TV rights and merchandising, but woe betide any player caught accepting a new watch or even receiving a real living allowance. Instant expulsion will follow.
None of which is to say that Sepp Blatter deserved yet another free pass. The game’s up and Fifa needs to clear its stable out. Perhaps that will free American prosecutors up to do something about the stench of corruption from sport on this side of the pond.