Sprint and T-Mobile nearing merger agreement

T-Mobile and Sprint, respectively the third and fourth largest wireless carriers in the U.S., are nearing a merger agreement, undisclosed sources told Reuters Friday. A due diligence period would follow the finalization of the agreement’s terms, but the companies expect a deal by October, according to Reuters’ source.

In August, Reuters says, Sprint CEO Marcelo Claure said an announcement regarding merger talks would come in “the near future.”

The merger proposal would be the first one “with significant antitrust risk” to be submitted to the Federal Trade Commission since President Donald Trump took office, Reuters notes. The President was elected on a platform that included the deregulation of the business environment.

Mayoshi Son, the founder of Japanese venture capital firm SoftBank, which controls the Sprint Corporation, met with Trump in late December, just after the former tycoon won the election.

Son found Trump’s business policy potentially favorable for SoftBank, and promised to invest $50 billion in the U.S. economy and to create 50,000 jobs.

A merger proposal would evince Son’s confidence that the regulatory environment has become laxer since Sprint and T-Mobile abandoned a merger proposal in 2014 amidst pressure from the FTC.

Indeed, the FTC might be more receptive to a transformative merger in the telecom industry now than it was three years ago. Earlier this year, Reuters says, FTC Chairman Ajit Pai said “effective competition [exists] in the marketplace for mobile wireless services.” Thursday, the agency will vote on whether to submit Pai’s report on the state of competition in the wireless services market to the U.S. Congress, which requires such a report annually.

But, the terms of the new merger will likely be less advantageous for Son and Sprint than those reached in 2014. Under the previous deal, Sprint would have controlled the combined company, while T-Mobile’s parent company, Deutsche Telecom, would have become a minority shareholder.

Over the past three years, though, T-Mobile has outperformed Sprint. Accordingly, the terms of the new agreement will likely flip, Reuters’ source said. Deutsche Telecom and T-Mobile stockholders would own a majority of the combined enterprise, while SoftBank and the rest of Sprint’s shareholders would have a minority stake.

T-Mobile CEO John Legere, who took the reins in 2012 and has guided the company’s surge, will likely run the combined company.

The merged enterprise would have 130 million subscribers, Reuters notes, making it the United States’ third-largest wireless carrier, behind AT&T, which had 136.5 million subscribers as of July, and Verizon, which reported 147.2 million subscribers that same month.

Sprint’s market cap of approximately $34 billion, combined with T-Mobile’s $53 billion figure, would give the new company a value of around $87 billion. AT&T’s market cap is about $237 billion; Verizon’s exceeds $205 billion.

Sprint reported annual revenue of $33.3 billion for fiscal 2016, which ended March 31. T-Mobile posted $37.2 billion in annual revenue for calendar 2016. So, the combined company would likely generate over $70 billion annually.

Verizon posted consolidated revenues of $126 billion and wireless revenues of $89.2 billion in 2016. AT&T’s figure came in at $163 billion.

Analysts say the Sprint/T-Mobile merger provides ample opportunity to cut expenses as well.

In their bid for regulatory approval, the companies will likely emphasize that the combined company would create jobs by making investments in the development of 5G, the next generation of mobile internet connectivity.

But the merger will also precipitate layoffs as the new company consolidates its corporate structure, Roger Entner of Recon Analytics told Reuters.

According to Reuters, Sprint briefly pursued a merger with Charter Communications earlier this year.

The FTC continues to review another potential consolidation in the industry: AT&T’s proposed $85.4-billion acquisition of Time Warner.

Sprint shares jumped six percent Friday; T-Mobile stock rose 1.06 percent.

Walgreens to revise proposal to buy over 2,000 Rite Aid stores

In yet another effort to appease the Federal Trade Commission (FTC), U.S. pharmacy chain Walgreens will likely revise its June proposal to acquire 2,186 individual Rite Aid stores for $5.18 billion, sources told Bloomberg Monday.

Walgreens’ announcement could come early this week, the sources said.

The two chains have been pursuing a deal for almost two years, but the three proposals they have submitted thus far have met resistance from the FTC. In October 2015, Walgreens proposed an outright takeover of Rite-Aid. Under that deal, the former company would have purchased the latter for $9 per share—that amounts to a total of $9.4 billion.

Walgreens offer represented a 48 percent premium on Rite Aid’s closing price on October 26, the day before the proposal was announced.

The FTC reportedly worried that Walgreens’ purchase of Rite Aid would compromise competition.

A report by the Drug Channels Institute indicates that at the close of 2016, Walgreens controlled 13.8 percent of the U.S. prescription market, in terms of revenue. Under five percent of that market belonged to Rite Aid. The takeover would have given the combined company 18.4 percent of the market.

CVS, the nation’s largest pharmacy chain in terms of revenue, holds 23.4 percent of the prescription market.

This January, in response to the FTC’s concerns, Walgreens revised the price per share to between $6.50 and $7—putting the total value of the purchase between $6.84 billion and $7.37 billion—and pledged to sell as many as 1,200 of its newly acquired Rite Aid stores (about a quarter of the 4,600 or so Rite Aid locations Walgreens would have acquired) to Fred’s, a regional pharmacy chain.

In June, amidst continued skepticism from the FTC, Walgreens took a different tack. Rather than taking over Rite Aid, Walgreens proposed buying 2,186 individual Rite Aid stores—roughly 48 percent of the total number of Rite Aids—for a total of $5.18 billion, leaving Rite Aid to operate as a stand-alone entity.

Because it abandoned the original takeover plan, Walgreens was obligated to pay Rite Aid a termination fee of $325 million in addition to the purchase price.

Rite Aid stock plunged about 30 percent on news of the abandoned takeover, Fortune notes.

The Fortune piece casts doubt on whether the FTC was set to block the merger, citing a CTFN report that in turn cites antitrust lawyers and a former DOJ official as saying in late June that the FTC was “more likely than not” to approve the deal.

Prior to the companies’ withdrawal of the proposal, the FTC had taken no action to block the agreement. Following the withdrawal, Fortune says, the FTC released a statement calling the companies’ action “voluntary” and saying it came before the companies “would have been free to close their transaction absent Commission action.”

But, Walgreens Chief Executive Officer Stefano Pessina implies that he amended the deal in the face of regulatory pressure

“This deal [the one announced in June] is much simpler,” said per Bloomberg, of the June proposal. “It is an asset deal so it is less controversial.”

The FTC has allegedly frowned upon that deal as well, so Walgreens is set to amend its proposal for the fourth time. Sources told Bloomberg the “number of stores involved in the deal would not change dramatically” (Bloomberg’s paraphrasing).

The deadline by which the FTC was required to complete its review of the June proposal is nearing, Bloomberg notes. When that deadline arrives, the agency will either approve the deal or request additional information.

If Walgreens submits a revised plan prior to the deadline, though, the FTC would have 30 more days to consider that new proposal, and investigation of the previous one would end.

Rite Aid shares jumped 3.8 percent to a two-and-a-half-year high Monday on news that Walgreens was considering revising the deal. Walgreens surged in early trading but quickly modulated. At the market’s close, the company’s shares had risen marginally (0.12 percent).

Featured image via Wikimedia Commons

Amazon will take control of Whole Foods Monday, slash prices

Amazon announced in a press release Thursday that it will take control of Whole Foods beginning Monday, The New York Times reports. When Whole Foods stores open Monday, shoppers will see lower prices on a number of products, including bananas, eggs, salmon, tilapia, Fuji and Gala apples, and almond butter.

“We’re determined to make healthy and organic food affordable for everyone,” Jeff Wilke, the executive who runs Amazon’s consumer businesses, said in the press release. “Everybody should be able to eat Whole Foods Market quality we will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards.”

Wilke said the price cuts to be implemented Monday are “just the beginning” of an effort to “continuously lower prices” at Whole Foods.

In the near future, the release says, Amazon Prime will function as a Whole Foods rewards program, and Prime members will “receive special savings and in-store benefits.”

Competitive pricing is a cornerstone of Amazon’s business model. The company, the Times notes, has made a habit of delighting the consumer even at the expense of its own shareholders, and even its bottom line.

Amazon’s low prices also help appease regulatory agencies like the FTC, which approved Amazon’s acquisition of Whole Foods Wednesday.

“At the end of the day, the FTC is in the business of watching out for the consumer,” said Brendan Witcher, a retail analyst at Forrester Research, per the Times.

Of course, in order to cut prices, Amazon will need to cut costs.

Though Amazon has been developing automation technology meant to reduce the need for human labor, the company has pledged that its acquisition of Whole Foods will not jeopardize the jobs of Whole Foods employees. According to the press release, Whole Foods will “continue to grow its team and create jobs in local communities as it opens new stores, hires new team members, and expands its support of local farmers and artisans.”

Rather than cut labor costs, Amazon and Whole Foods will “invest in additional areas over time, including in merchandising and logistics, to enable lower prices for Whole Foods Market customers,” the release says.

The press release says Amazon values “customer obsession rather than competitor focus,” but the company’s ever-falling prices have historically made things difficult on competitors. In the past, the Times points out, Amazon has started price wars with Barnes & Noble and Walmart. After diapers.com failed to match Amazon’s prices, diapers.com parent company Quidsi agreed to a buyout deal.

Meanwhile, Whole Foods’ high prices have been its primary competitive disadvantage to low-cost, high-volume operations like Walmart and Costco. Many experts expect the Whole Foods-Amazon deal to send competitors reeling as Whole Foods quality becomes available at Amazon prices.

“I absolutely think it’s putting the rest of the market on notice,” Bob Hetu, an analyst at Gartner, the technology research firm, said, per the Times, of Amazon’s announcement on pricing.

Walmart stock dropped 2 percent Thursday following the announcement. Kroger’s shares fell 8 percent.

Walmart is making its own push to slash prices. Last year, the Times says, Walmart allocated millions of dollars toward the effort.

Walmart is also taking steps to increase its online presence in the grocery sphere and elsewhere.

Google Express, which fashions itself as an Amazon competitor, now sells a number of Walmart products.

Moreover, Walmart’s market share in the grocery space far exceeds that of Whole Foods. With 4,600 stores, Walmart is the nation’s largest grocer. Whole Foods has just 460 stores.

“We feel great about our position with our network of stores around the country and fast growing e-commerce and online grocery businesses,” said Randy Hargrove, a spokesman for Walmart, per the Times.

Stew Leonard Jr., chief executive of a regional grocery chain that operates six stores throughout New York and Connecticut and, like Whole Foods, aims to provide the freshest available produce, says his business has seen and survived a procession of upheavals in the market.

“I’ve been in retail since I was a kid, and I’m always nervous,” he said. “Costcos were opening, then Walmarts, then Whole Foods. But at the end of the day, you just have to try and get the freshest corn out there on the sidewalk.”

Many expect Amazon to leverage the Whole Foods acquisition to grow its online grocery delivery services like AmazonFresh, which has operated for over a decade with limited success.

Per the press release, Amazon will sell proprietary Whole Foods brands—including 365 Everyday Value, Whole Foods Market, Whole Paws and Whole Catch—through Amazon.com, AmazonFresh, Prime Pantry and Prime Now. Amazon implies that Whole Foods brands will be available on said sites beginning Monday.

According to the Times though, most consumers still prefer to buy their groceries at brick and mortar stores rather than online.

Amazon will also install its Amazon Lockers in some number of Whole Foods stores so that customers can pick up and return items purchased from Amazon at their local grocery stores.

Featured image via Pixabay

Discovery to Acquire Scripps Networks in $14.6 Billion Deal

Scripps Networks, the media conglomerate that operates HGTV, the Travel Channel, Food Network, and other channels; and Discovery, which runs The Discovery Channel, Animal Planet, TLC, etc., have arrived at a $14.6 billion merger deal, Georg Szalai of The Hollywood Reporter reports. The companies believe the merger, which is expected to solidify in early 2018, will facilitate “significant cost synergies,” to the tune of $350 million in savings, and provide new opportunities for digital and direct to consumer sales.

The merger will also help Scripps to reach an international audience “through Discovery’s best-in-class global distribution, sales and languaging infrastructure,” the companies said in a statement.

“This agreement with Discovery,” said Scripps CEO Kenneth Lowe, “presents an unmatched opportunity for Scripps to grow its leading lifestyle brands across the world and on new and emerging channels including short-form, direct-to-consumer and streaming platforms.”

The combined company will “offer a complementary and dynamic suite of brands,” including 8,000 hours per year of digital programming and 7 billion “short-form video streams.”

Moreover, ”Discovery’s added scale, content engine and multiple brand offerings will present a compelling opportunity for new digital distribution partners, including mobile, OTT and direct-to-consumer platforms and offerings,” according to the companies’ statement.

The merged entity will control roughly 20% of America’s pay TV market. Both Scripps and Discovery cater to women, and the new company will account for about 20% of women watching primetime pay TV in the US.

Discovery Channel will buyout Scripps for $90/share: $63 in cash and $27 worth of stock in the merged company. Scripps shareholders will own about 20% of Discovery, and Lowe will likely join Discovery’s board.

When rumors of a possible merger broke in mid July, Scripps’ shares were valued at $67.02 a piece. Since July 18, the stock has climbed more than 34%. Today, as you would expect, Scripps’ shares are valued at just under $90 ($87.50 to be exact, as of 1:00 Eastern Monday).

Viacom, which owns CMT, MTV, BET, Nickelodeon, and Spike, just to name a few, was also reportedly pursuing a takeover of Scripps, Joe Flint of Fox Business wrote a week ago. Scripps stock soared on rumors of that merger as well.

Wells Fargo analyst Marci Ryvicker believes the Scripp-Discovery deal was more advantageous for Scripp than the potential Viacom one, but adds that the merger by no means solves all the companies’ problems.

“Although we still don’t believe that either combination [Discovery-Scripps or Viacom-Scripps] solves the long-term affiliate fee ‘issue,’ our math at least suggests that Discovery would be the better buyer of Scripps — both from a pro forma leverage and an accretion standpoint,” Ryvicker said.

Analysts are split on whether the merger was prudent. Steven Cahall of RBC Capital Markets called the deal one of “the most logical in media.”

“Both [Discovery and Scripps] are somewhat relatively sub-scale when dealing with distributors, and while their combination may not put them on equal footing with a broadcast network or major sports rights owner, scale matters and should improve network carriage and affiliate negotiations,” Cahall said.

Indeed, the companies have said they hope the merger will “create a new scale player with a strong ability to compete for audiences and ad dollars.”

Analyst Michael Nathanson of MoffettNathonson agrees that the merger will create “improved relative scale,” and further concedes that it will “likely” lead to “ample cost synergies” and “international revenue opportunities.” Still, he does not “think this merger will fundamentally alter the long-term prospects of these companies.”

The companies themselves, though, are still on their honeymoon.

“This is an exciting new chapter for Discovery,” said David Zaslav, president and CEO of Discovery Communications. “Scripps is one of the best-run media companies in the world with terrific assets, strong brands and popular talent and formats.”

Sears to Sell Kenmore Appliances On Amazon

Sears announced Thursday that it would begin selling Kenmore appliances on Amazon, Phil Wahba of Fortune reports.

By partnering with Amazon, Sears will bring its Kenmore products to a wider market than ever before. “The launch of Kenmore products on Amazon.com will significantly expand the distribution and availability of the Kenmore brand in the U.S.,” Sears Holdings CEO Eddie Lampert said in a statement.

Sears Holdings’ stock jumped over 20% on the news in early trading Thursday, to $10.50 a share, but have since modulated to $9.78 per share as of 1:00 Eastern, still an 11% increase since the market closed Wednesday.

Kenmore appliances will also be integrated with Amazon Alexa, as Sears looks to capitalize on a recent boom in the “smart home” industry, which sells high-tech home appliances that can, among other things, be controlled remotely.

“Voice is a natural interface for the smart home, so we’re thrilled that customers can now simply ask Alexa to interact with their Kenmore Smart appliances,” said Charlie Kindel, Director of Alexa Smart Home. “We’re excited that Kenmore has added Alexa functionality to these products and we think customers will love the convenience of cooling their home, starting their laundry, and more, using only their voice.”

J.C. Penny is making its own strides into the “smart-home” sector, and in late June Best Buy announced plans to showcase the Amazon Echo and the Google Home, which can be used to power “smart appliances,” more prominently at 700 of its stores.

The Amazon partnership marks Sears latest effort to compensate for declining sales numbers by licensing out or liquidating its proprietary brands. In January, Sears sold Craftsman, its line of tools, to Stamley Black and Decker in a $900 million deal.

“We continuously look for opportunities to enhance the reach of our iconic brands to more customers and create additional value from our assets,” Lampert says.

Sears Holdings, which owns Kmart in addition to Sears, has seen drastic drops in important performance metrics over few years, largely because Amazon continues to dominate the retail sector. Since 2012, Sears Holdings’ total revenue has fallen almost 50%, according to eMarketer.com. Its online sales, which consistently account for less than 10% of total revenue, have dropped almost 40% since 2013.

Sales per store have risen more than 11% since 2012, but Sears has been forced to close almost half its stores in the past five years. As of June 2017, after Sears’ announcement that it would close 72 more stores, approximately 1200 stores were operational, as opposed to 2073 in 2012, Hayley Peterson of businessinsider.com reports. Almost 900 Sears stores (43%) have shut their doors in the past half-decade.

Meanwhile, Amazon’s total revenue has soared by over 130% since 2012. That year, the company reported just over $61 billion in revenue; in 2016, it brought in almost $136 billion. Gross profits have jumped by 235% since 2012, from about 15 billion to just under 51 billion.

Sears is not the only retail company to join forces with the eCommerce giant, which has so long been the enemy of brick-and-mortar operations. Spencer Soper of Bloomberg  reported on June 21 that Nike was set to begin selling shoes directly through Amazon. Nike products were already sold on Amazon by third-parties, but many of them were knockoffs.

Nike’s annual revenue, unlike Sears’, has continued to trend upward over the past five years, as has the company’s stock. Still, by hopping on the back of Amazon, the company stands to make exponential gains. Jackie Wattles of CNN cites a Goldman report that says the partnership could increase Nike’s annual revenue by over 150%, from $200 million to $500 million.

Sears’ and Nike’s partnerships with Amazon could spur a new trend toward cooperation rather than competition between online retailers and brick-and-mortar stores. Traditional retailers are presumably employing an “if you can’t beat them, join them” logic, while Amazon jumps at the opportunity to offer established and well-renowned brands such as Kenmore on its site.

The alliance makes since, even if Sears and Amazon have been sworn enemies since the latter began cutting into the former’s profits.

Featured Image via Flickr/Raymond Shobe

Uber-Yandex Ride-Sharing Merger in Russia

Uber and Yandex have agreed to a merger of their ride-sharing businesses in Russia and five eastern European markets with Yandex. This is the second withdrawal on Uber’s global presence since their exit from China a year ago. Yandex, which is essentially the “Google of Russia,” will be the leading partner in this newly established company.

Yandex and Uber both stated that they will join together in Russia, Armenia, Azerbaijan, Belarus, Georgia, and Kazakhstan through a new company operating in 123 cities. Uber will invest $225 million into the company, owning 36.6 percent of the company. Yandex on the other hand will be investing $100 million into the new company, but owning 59.3 percent of the company. The remaining 4.1 percent will be held by employees according to a fully diluted basis.

Uber will also be contributing its UberEATS food delivery business into the merger venture, which will act under the joint company in the 6 previously mentioned countries. Despite Uber’s influence as a global ride-sharing company, Yandex holds a more dominant position in the specified regions, providing services including Web search, maps and mobile navigation in the region.

Uber’s position has significantly weakened as more competition has developed as well as the scandals resulting in Uber CEO Travis Kalanick resigning from his position. Instead of trying to adapt and dominate each market around the world, Uber is better off allying itself with local players that dominate their fields to compensate for the over encompassing regulations that Uber was originally responsible for upholding. This does not absolve Uber of ensuring their drivers and riders are protected and fairly treated, but instead of controlling the specific regulations, Uber will be in charge of supervising that the proper regulations are being managed by its partner companies.

While some may view the ratio between what Uber is investing and the percentage of ownership of the new company they are receiving is unfair, but it is in fact beneficial for Uber in the long run. The partner company is responsible for everything beside operations, and all Uber has to focus on in these new developments are the operations themselves. Uber in fact saves on logistics costs, and grant themselves a powerful platform to spread its services throughout regions that are otherwise impenetrable by foreign businesses. While Uber’s position within the new company is up to the discretion of Yandex, 36.6 percent is not an insignificant portion that does provide Uber with some leeway.

In this relationship, Yandex will be controlling the direction of the proverbial ship that is the new company, and it is up to Yandex that the environment either maintains a status quo or proves beneficial for the new company, so that it can continue its operations. UberEATS is a helpful tool in ensuring that even when the drivers are not working with riders, they are still maintaining a revenue stream through food delivery.

It will be interesting to see if more countries follow suit in establishing a merger with Uber. Local companies can use Uber as proof of a powerful global business partner, further establishing and improving the local company’s reputation. As long as rates are competitive, the ride-sharing and food delivery components that Uber provides can act as free publicity and a fairly dependable revenue stream.

One thing to keep in mind are the recent news involving Uber, and whether establishing a partner relationship will in fact diminish the partner company’s reputation, as one interpretation is that through partnership the company in fact condones the behavior exhibited by Uber drivers and the reaction to criticism.

Considering the increase in ride-sharing companies even within the U.S., maybe Uber will consider new mergers with local companies, should mergers become an established business practice that’s proves profitable for Uber.

Westar-Great Plains Energy Merger Awaits Approval by Shareholders, KCC

Monday, Midwest electric companies Westar Energy and Great Plains Energy announced plans for a merger. According to Morgan Chilson of The Topeka Capital-Journal, no cash would be exchanged, and neither company would take on any debt as a result of the agreement, which has a “combined equity value” of $14 billion.

Westar CEO Mark Ruelle insists “neither company is buying the other” in the deal, which is significantly revised from a previous proposal the Kansas Corporation Commission (KCC) denied in April.

Under that deal, GPE would have purchased Westar for $12.2 billion. Despite widespread support of the takeover amongst both companies’ shareholders, the KCC worried the amount of debt GPE would have inherited from Westar “created an unacceptably high financial risk for current and future customers,” says James Dornbrook of The Kansas City Business Journal.

The KCC also feared the deal would remove several high-paying jobs from downtown Topeka, where Westar is headquartered.

After rejecting that proposal, the KCC said that any future merger attempt by Westar and GPE would need to be “fundamentally different and wholly restructured.”

The leadership of both companies believes the deal announced Monday is just that. For one, it is a merger rather than an acquisition.

The merger would form a new holding company headquartered in Kansas City, MO, where GPE is currently based. However, the Topeka location that formerly held Westar’s headquarters would remain active and continue to provide 500 “headquarter type” positions for engineers and top administrators, Ruelle says.

In the previous proposal, says GPE CEO Terry Bassham, “we had agreed to maintain the [Topeka] headquarters. What we hadn’t done is said how many [positions we would retain] for how long.”

Neither company will layoff a single employee.

In addition to the KCC’s approval, the deal awaits ratification by the companies’ shareholders. Neither CEO expects any opposition from investors, although the revised proposal looks on its face to be less beneficial to Westar stockholders than its predecessor.

The previous deal required GPE to buyout Westar’s shares for $51 in cash and $9 worth of stock in GPE. On April 20, 2017, Westar’s shares reached a monthly low of $50.87 each, so the $60 per share offer was attractive.

It also, Ruelle admits, proved “too good to be true” for his shareholders.

Under the new agreement, Westar investors would receive one share of common stock in the new company for each share of Westar stock they currently hold. GPE investors would exchange each of their shares for .5981 shares in the new company. Both exchanges would be tax-free

The new deal promises Westar stockholders a 15% increase in dividends, Chilson writes.

Although the previous agreement provided Westar shareholders with more profit up front, Ruelle is confident the most recent version offers a better long term outlook.

Yet, Westar stock has suffered a steep decline thus far Monday. Shares closed at $53.13 Friday; as of 3:23 PM EST Monday afternoon, shares are valued at $50.30. They have dropped 5.33% since Friday. It is, of course, unfair to judge the market on the ebbs and flows of a few hours, but early indications suggest the new deal will not find as much support amongst shareholders as Ruelle hopes it will.

GPE shares, on the other hand, have trended upward in the market today. They closed at $29.24 Friday, and rose this morning to a daily high of $30.27. Despite a marked dip around 3:00 Eastern this afternoon, shares have climbed to $29.76 as of 3:33 Eastern, $0.51 (1.74%) above Friday’s closing price.

Westar currently serves 690,000 customers in eastern Kansas, making it the state’s largest electric company. GPE, along with subsidiaries Kansas City Power & Light Company and Greater Missouri Operations Company, provides electricity for over 850,000 people across Missouri and Kansas.

The company born out of the merger would serve approximately 1 million people in Kansas and just under 600,000 customers in Missouri.

Government’s Antitrust Review of Time Warner-AT&T Merger Could Be Used as Leverage in Trump/CNN Feud

AT&T’s $85 billion proposal to acquire  Time Warner, the media and entertainment conglomerate that owns CNN, HBO, and others, has been submitted to the government for antitrust review. Given the tension between CNN and US President Donald Trump, many fear that the White House will use the review process as political leverage against the news network.

However, Makan Delrahim, whom Trump appointed as head of the antitrust division of the Department of Justice, has said he does not see any significant dangers in the bill. If the bill does not violate any antitrust regulations, the Trump administration will have no legal avenue by which to impede it.

Economist Hal Singer, who specializes in antitrust and media issues, says he does not believe the Trump administration can make any “[legally] credible threat” to block the deal.

“I think the most you could do is extract some sort of concessions as to the merged entity’s dealings with independent networks and rival distributors,” he said.

AT&T, along with many economists, has argued that the deal would be a “vertical merger” because AT&T and Time Warner occupy different sectors of the industry, and are not direct rivals. Therefore, the merger would not pose a threat to market competition.

Some disagree. Oregon Senator Ron Wyden told POLITICO he has “serious concerns about the…merger because it stands to reduce consumers’ choices while increasing their costs.”

During a campaign in which he repeatedly bashed CNN, Trump pledged to block the AT&T-Time Warner merger, calling it “an example of the power structure I’m fighting.”  Whether the “power structure” Trump refers to is corporate consolidation or the news media is up for debate.

Trump has taken a number of steps to reduce government intervention in the free market. The administration has eased regulations in the financial sphere, for instance, that checked the growth of banks.

So the president’s stance on the Time Warner deal is something of an aberration, and some wonder whether Trump’s opposition to the merger is motivated less by a desire to protect market competition than by an agenda to silence unwelcome voices in the media.

On Sunday, Trump posted a video on Twitter which shows him repeatedly punching a CNN logo superimposed upon a man’s head. The president did not include text with the video, but appended the hashtags “#FraudNewsCNN and #FFN” to his tweet.

When asked about the video at a news conference in Poland Thursday, Trump said that CNN has covered his presidency in a “very dishonest way,” “has been fake news for a long time,” and has “serious problems.”

So there is question as to whether Trump’s administration will impartially consider the merger request.

Minnesota Senator Al Franken, a Democrat who has reservations about the merger, recommends that an “independent antitrust division” evaluate AT&T’s proposal so that Trump’s “war against the media [does] not influence the transaction.”

Wyden encourages the reviewers of the proposal to consider the effect the deal would have on the business market, not the president’s personal agenda. To allow Trump’s attitude toward the media to influence the decision “would be illegal, and flies in the face of the First Amendment [proteting freedom of speech and of press],” he says.

According to The Financial Times, Trump’s transition team “reassured AT&T” in December that the merger request would be “scrutinized without prejudice.”

Time Warner subsidiaries like CNN would remain autonomous under the merger: AT&T CEO Randall Stephenson says his company is “committed to continuing the editorial independence of CNN.”

Hopefully, Mr. Trump and his administration share that commitment. Even if they do not, they may find it difficult to find substantial legal grounds to justify blocking the merger.

Featured image via Flickr/Gage Skidmore

Dow-DuPont Merger Delayed Due to FMC Deal

Dow Chemical and DuPont have delayed their merger. The cause would be due to the fact that both are making at attempt at an asset swap, totaling $1.6 billion, with FMC Corp. a known pesticide maker.

The merger between Dow Chemical and DuPont runs at an estimated $78.7 billion and is expected to be finalized sometime in August. Yet it would seem that FMC grew the most in the eight years that it came to the agreement to purchase DuPont’s crop-protection assets. The European Union wanted those assets to be sold off before things are finalized with Dow Chemical.

DuPont has plans to gain FMC’s health and nutrition business. This deal with FMC, according to DuPont Chief Executive Ed Breen, will gratify “the bulk” of what’s needed for the company to gain the permission of governments around the globe. The largest speed bump in the two companies’ merger is that the European Commission, as well as their global counterparts, are to review all the implications of any antitrust issues that go along with the FMC transactions.

It’s stated that the closing extension is the most recent for the agreement that was drafted back in 2015 and only closed just last year. Both companies gained the approval of the European Commission for their merger back in March. The way they did this was agreeing to sell all pesticide and polymer assets. Yet while this brought them a bit further, they still need antitrust clearance from China, Brazil, and the United States.

Breen believes that the requirements are just “little things” that each country needs in order to finalize the regulatory approvals.

Besides research and development programs, DuPont plans to sell herbicide and insecticide to FMC. Among the assets that the company is selling to FMC is Rynaxypyr, which has earned itself the reputation of being a top seller for DuPont. Just last year Rynaxypyr earned the company an estimated $450 million. That’s just before interest, taxes, depreciation and amortization was added on. Afterward the total climbed to around $1.4 billion.

A company based in Delaware, called Wilmington, has plans to acquire FMC food businesses as well as ingredients used in pharmaceuticals that usually generate around $228 million in earnings.

It was also stated to a source that FMC has plans to pay DuPont over $1.2 billion as well as give DuPont $425 million in working capital. That money is supposed to reflect the difference in asset values.

Even after all the payments, FMC stills poses to be a good deal for DuPont. After its dealing with DuPont, FMC will hold over 90 percent of pesticide sales. That will make the Philadelphia company the fifth largest producer of crop protection chemicals.

Aside from everything else, Dow and DuPont say they still have plans to combine forces. Once this is done, however, the two say the will then proceed to divide the finally merged company into three. This will take place just over 18 months of closing the deal. The first spinoff company to emerge from this will be a plastics company that will carry on the name, Dow.

The other two companies coming out of the merger will be agriculture and specialty companies. All three will retain the BBB rating by Standard & Poor’s, which is the current rating that Dow now holds.

Although FMC is still thought of as a good deal by some analysts, it is expected to reduce the cost savings that will be anticipated by the merger of DuPont and Dow. Yet once the deal is closed and the two companies have merged, it’s predicted that their combination will bring a targeted $3 billion of synergies.

Walgreens Hits Wall With Rite Aid Merger

Walgreens’ acquisition of Rite Aid doesn’t seem to be going according to plan. Walgreens has yet to gain U.S. antitrust clearance from Federal Trade Commission (FTC) officials.

The FTC’s lawyers don’t seem too convinced of the Walgreens’ idea to sell 865 of its stores to Fred’s then take over Rite Aid. The hesitation on the deal also worries investors who are more than optimistic about the transaction. Yet Walgreens offer of $9 a share has dropped to $2.57.

The merger of Walgreens and Rite Aid is estimated at $9.4 billion. This would bring Walgreen past CVS Pharmacy, currently the number one pharmaceutical company in the United States.

But for some reason, the FTC has been dragging its feet. There’s a slight possibility that this could be due to the Trump administration’s recent takeover. There will be three positions to fill including the chairman’s seat. Edith Ramirez recently announced that she will step down as chairwoman come February 10th.

Although it isn’t clear who will replace these vacant seats, there is also no way to tell how the Trump administration will follow through. While the Obama administration was in power, the FTC tried to make sure that mergers were always in benefit of the consumer.

One of the jobs of the FTC is to make sure that the buyer’s assets can bring back competition. That hasn’t always been the case. For example, the FTC allowed the acquisition of Hertz’s business Advantage Rent A Car by another company. Not long after the company obtained Advantage, Advantage had to file for bankruptcy.

The CFO of CVS stated at a conference that he doesn’t believe Fred’s will be feasible competition in the foreseeable future.

AT&T to Continue with Time Warner Merger Despite Opposition

AT&T faces opposition to its merger with Time Warner from multiple sides—including the executive branch of government. The telecommunications company has also encountered suspicions concerning licenses granted by the Federal Communications Commission.

In regulatory filings dated January 6, AT&T asserts that its $85 billion merger will go on according to plan. AT&T adds that it does not plan on transferring FCC licenses between companies, so there should not be a question of FCC intervention.

In a filing with the Securities and Exchange Commission, AT&T stated that Time Warner reviewed all licenses held that were granted by the FCC and did not anticipate the need to transfer these licenses to AT&T. However, some doubt remains as to how exactly the two telecommunication giants plan to dispose of the licenses in question before the merger is to take place.

Bloomberg reports that Time Warner could be looking to sell these its licenses another broadcaster; a person familiar with the matter holds that instead of owning the licenses, Time Warner can contract with third party companies. The issue of licensing is not the only one AT&T must confront before it can successfully merge with Time Warner. President-elect Donald Trump pledged to oppose the merger during his campaign, citing concerns of one company having too much of a monopoly. Reuters reports his position has not moved on the issue, according to a transition official. Time Warner CEO Jeff Bewkes remains confident that opposition to the deal will fall once everyone is well-informed. At an investigative Senate Judiciary hearing on the merger, Bewkes attributed opposition to misinformation, “There were comments made from candidates on all sides, saying they were against the merger before any of them had information.”

The deciding factor of the AT&T-Time Warner merger at this point is Time Warner itself. The February 15th shareholder meeting will review the terms of the deal and determine whether or not to approve it.

Groupon Acquires OrderUp

Groupon has acquired OrderUp, a food delivery service that caters to over 40 cities and 25 states in the United States.

The price of the deal was disclosed, but the six-year-old food service company, which claims to have served over 10 million people, couldn’t have come with a cheap price tag.

Groupon saw a slow decline in the past few years as the “daily deal” concept, making the company thrive, got some competition.

CEO of Groupon Eric Lefkofsky said,

“The potential in delivery and takeout is apparent –especially with the growth of mobile – and OrderUp’s operational ability, coupled with Groupon’s engaged customer and merchant base, bring tremendous scale to the space.”

The company has long since been established in the coupon giving business, ideal for large groups of people who are on a budget.

What makes OrderUp different from its competitors such as GrubHub and Eat 24 Hours is that it has its own delivery system.

OrderUp allows for restaurants who don’t normally deliver to have drivers do it for them; this is especially the case for places that don’t have enough staff or the capability to set it up. Without this feature, restaurants limit themselves to only certain cliental and the money that’s to be made off of delivery costs.

Owner of Di Pasquale’s Marketplace Joe Di Pasquale said,

“When I heard about OrderUp, I was very hesitant. Customers asked us all the time about delivery. However we didn’t have the staff or know-how to organize our own delivery service. OrderUp is the perfect fit for Di Pasquale’s. It’s the easiest way to start a delivery service. Honestly, I should have done it earlier.”

OrderUp uses contracted drivers who can either accept or deny a potential delivery based on their own hours.

In the announcement, OrderUp wrote that Orlando and Cincinnati will be two of the newest cities to have access to the delivery service.

Revolution Ventures managing partner Tige Savage, who is an investor in OrderUp said,

“Consumers love the convenience of ordering online. Yet, outside the major metropolitan markets, its shockingly difficult to find online food delivery options.”

OrderUp sees this acquisition as a great opportunity for the company to expand its outreach.

CEO of OrderUp Christ Jeffery said,

“Groupon’s reach and ability to connect supply and demand at scale make it the perfect destination for us to grow even faster and expand in our targeted local markets. We look forward to bringing the thousands of great restaurants that we feature to hungry Groupon customers across the country.”

Despite the acquisition, OrderUp will still function as a standalone company and will keep their headquarters which are set in Baltimore. This will all be done while still promoting themselves through Groupon’s merchant pages, called Pages, which were created in 2014.

In a press release, it’s described as giving users access to

“ratings, tips, money-saving opportunities and other useful information for local businesses in the United States.”

The feature is similar to that of Yelp and will be a great feature to help promote OrderUp.

This is not the first combination between food delivery services. GrubHub and Seamless are two takeout food establishments that primarily generate business through computer and phone.

The thing that makes this merging of Groupon and OrderUp so different is that they are each bringing something to the table, with Groupon having a background in a variety of deals and OrderUp’s delivery feature.

Image: Via OrderUp

Sysco Drops Plans to Purchase US Foods After FTC Ruling

After two years of negotiation, Sysco has removed their proposal for the purchasing of US Foods.

US Foods is a national food distributor, who works for brands like Cattleman’s Selection, Glenview Farms, Hilltop Hearth and many more.

Sysco helps foodservice operators that works with 425,000 customers who sells, markets and distributes food to places like restaurants and educational facilities.

Sysco President Billy DeLaney said in a press release, “We believed the merger was the right strategic decision for us, and we are disappointed that it did not come to fruition. However, we are prepared to move forward with initiatives that will contribute to the success of Sysco and our stakeholders.”

Talks of the purchase was started in 2013 where Sysco would buy out US Foods for $3.5 billion. The purchase, as of now, has taken a year and a half to see any real results. The purchase struggled to be completed after there was backlash.

DeLaney said, “After reviewing our options, including whether to appeal the Court’s decision, we have concluded that it’s in the best interest of all our stakeholders to move on.”

If the deal had gone through, Sysco would have had control of distributions of foods for over 75 percent of the market.

“Everything starts with the customer. Our vision remains clear: to be our customers’ most valued and trusted business partner. If our customers succeed, then we succeed. Our relentless focus on providing exceptional customer service and differentiated solutions to help our customers grow is unwavering,” said DeLaney.

DeLaney is referencing the Federal Trade Commission’s block on the merging of the two companies. The FCC stopped the merger because the commission feared it could lead to increased prices and a lack of diversity in the distribution of foods.

The FCC was not alone in this fear.

According to Forbes, “State attorneys general in California, Illinois, Iowa, Maryland, Minnesota, Nebraska, Ohio, Virginia, Pennsylvania, Tennessee, North Carolina, and the District of Columbia joined the FTC in its complaint this February.”

Sysco had offered alternatives, such as dismantling over 11 of the U.S. Food distribution centers, out of their 60 different locations nationwide, and therefore giving Sysco less power if the acquisition went through, but this was not sufficient.

According to Director of the Regulator’s Bureau of Comeptition, Debbie Feinstein, “Sysco and U.S. Foods’ decision to abandon the transaction is a victory for both competition consumers. The evidence shows that Sysco and U.S. Foods were strong rivals in borderline food distribution whose combination would have harmed consumers.”

Sysco had first declared that they would take a few days to reconsider their plans, and have ultimately decided not to go through with it.

As a result, the $8.2 billion deal will not go through, and instead Sysco will give $300 million to U.S. Foods and $12.5 million to Performance Food Group, who had intended to buy the 11 U.S. Food Distribution Centers, had they been broken off from the company as a planned alternative.

Bruce Solker, the Chair of the Antitrust Section at the Law Firm Mintz Levin told Forbes, “This is a very big win for the FTC. They were able to establish how to define a national market for national customers in a hotly contested case.”

Despite the ending of the case, the company still has plans to seek out other, more feasible acquisitions.

Without the merger, there would be more fierce competition, which is better for the market place. This is what the FTC was aiming for in their decision, and there is hope that companies will consider this ruling before trying to merge into one super company.

Image via ‘Sysco’

Hot Topic in Bidding War for ThinkGeek

The purchase of ThinkGeek has turned into a bidding war.
The purchase of ThinkGeek has turned into a bidding war. Image: Via ThinkGeek.com

Hot Topic is in talks with purchasing Geeknet, as long as the company doesn’t take the higher bid.

Hot Topic, which was bought by Sycamore Partners in 2013 for $600 million, is in talks of acquiring Geeknet.

As of May 26, Hot Topic was in talks of buying Geeknet, one of ThinkGeek’s companies, for $122 million, partially in cash and the rest in cash equivalents.

The purchase is based off of the company’s stocks being worth $17.50 a share.

According to PR Newswire,

“Consummation of the tender off is subject to certain customary conditions. Shareholders representing approximately 21% of Geeknet outstanding shares have committed to participate in the tender offer.”

This deal was on its way to happening, when a third unnamed party stepped in offering a better deal.

According to IGN, “Hot Topic CEO Lisa Harper said the company is pleased to have entered into this agreement, and it looks forward to “adding Geeknet’s innovative products and services” to its portfolio.”

ThinkGeek sells things from popular fandoms such as Star Wars, Star Trek, and The Walking Dead. From electronics to replicas of weapons used in your favorite TV show, this website is every fan girls, or boys, dream.

In the original release made on May 26 by Geeknet, Chief Executive Officer of Geeknet said,

“Our Board and management team believe this transaction is in the best interest of the Company and its stockholders.”

These characteristics would mesh well with the items and target audience that Hot Topic has cultivated over the years.

Hot Topic is also known for its selling of apparel and accessories of popular TV shows and movie franchises at the time.

The difference between the two companies is that Geeknet only has an online presence. According to the release,

“Since 1999, ThinkGeek has been creating a world where everyone can express their inner geek, embrace their passions, and connect with each other.”

This deal trended quickly over the internet, but only a day later Geeknet published another press release explaining that another company, whom they refuse to name, is offering $20 a share for the company. Despite this offer, Geeknet explained they are sticking to their original deal with Hot Topic, as was advised to them.

Geeknet explained that they will still review the offer, but have no immediate plans of accepting it. This doesn’t mean that they aren’t considering the deal.

According to the release,

“The Company’s board of directors, in consultation with its legal and financial advisors, will carefully review and consider the Bidder’s proposal.”

Since that release on May 27, a third release was made on May 29 where Geeknet Board of Directors saw the higher bid as having more potential than originally thought.

Geeknet went into more detail about the anonymous bidder, saying that the bidder is giving them six days, as of the day of their original offer, to accept the offer.

As the release states,

“The Company has notified Hot Topic of the Board of Director’s determination and pursuant to the Hot Topic Merger Agreement. Hot Topic has the option until 9 a.m., Eastern Time, on Monday, June 1, 2015 (‘Match Period’), to match or exceed the Bidder’s offer.”

If Hot Topic’s purchase of Geeknet goes through, the deal should be completed by June 19, 2015.

The release went onto explain that they intend to wait for a revised offer from Hot Topic before they make a final decision. They also assured that, despite the better offer from the “Bidder”, their board of directors are still in support of Hot Topic’s offer.

There are only a few days until the deadline is up, and shoppers are anxiously awaiting to find out the outcome.

Image: Via ThinkGeek.com

Dollar Tree Buys Family Dollar for $8.5B

Dollar Tree has bought out Family Dollar for $8.5 billion, according to an announcement Monday, July 28.  This cash-and-stock deal is valued at $74.50 a share, and Family Dollar stockholders will obtain $59.60 in cash and $14.90 equivalent in Dollar Tree shares, according to USA Today.

“This acquisition will extend our reach to lower-income customers and strengthen and diversify our store footprint. We plan to leverage best practices across both organizations to deliver significant synergies, while we accelerate and augment Family Dollar’s recently introduced strategic initiatives. Combined, our growth potential is enhanced with improved opportunities to increase the productivity of the stores and to open more stores across multiple banners,” said Dollar Tree CEO Bob Sasser in a press release.

According to The Wall Street Journal, the recent recession brought the dollar stores a new band of customers, and they are desperate to hold on to these customers, as well as others they may have attracted during the economic downfall.

Hence, both companies expect to continue prospering with the union, and the Dollar Tree press release stated that Family Dollar CEO Howard Levine will continue on with the business and report directly to Sasser. With both powerhouse leaders on board, the store should have no difficulty gaining business.

“We are excited to welcome the Family Dollar team to Dollar Tree, and we look forward to working together to deliver increased value to the consumer and to our shareholders,” said Sasser in the press release.

 

Did Priceline Offer Too Much for OpenTable?

Recently the travel discount provider Priceline agreed to purchase OpenTable for $2.6 billion. OpenTable, for those who are unaware, is a service that allows users to make reservations conveniently on their smart phone. And while the company is unarguably a success, Forbes has recently called into question the multi-billion cash offer that Priceline made.

Priceline is paying $103 a share, approximately 47% higher than the $70 OpenTable closed at on Friday. Forbes analysis of OpenTable however, has the company’s value lower at around $1.65 billion. The premium that Priceline has offered most likely has to do with other competitive bids it expects OpenTable to receive.

OpenTable currently has 31,583 restaurants using the service to take reservations. Additionally it has been reported that the company successfully seated a little under 47 million diners within the first three months of this year alone. According to Forbes, data compiled from OpenTable indicates that the convenient reservation maker has seated approximately 570 million people in the last seven years.

But compared to the business Priceline generates, OpenTable seems to be just a drop in the bucket. Priceline reported that their total revenue for 2013 was $6.8 billion. In comparison OpenTable only made $190 million in the same amount of time. What really separates the two companies though, is that international business accounts for 90% of Priceline’s total sales. OpenTable has yet to report a quarterly profit for its international market.

Like Priceline has done with past acquisitions such as Kayak or Booking.com, OpenTable will most likely continue to operate independently from the Priceline banner. Forbes reported Priceline CEO Darren Huston as saying that the company’s focus will be helping “the OpenTable team accelerate their global expansion.”

Currently OpenTable only has 7,700 restaurants who participate in the service in the global market. Priceline is optimistic though that they will be able to increase this figure by 15-20% annually in years to follow. Forbes reported that a 20% increase in international restaurants would increase the company’s value as much as $350 million. OpenTable will also be able to cut operating and marketing costs as well as increase margins by merging into Priceline. All in all, OpenTable’s value is expected to increase by over a billion dollars. So as long as all goes to plan it looks like Priceline’s investment is set to pay off.

 

Photo: Priceline.com

Pfizer offer of $117 Billion Rejected By AstraZeneca Again!

Pfizer who is currently trying to buy AstraZeneca got rejected again. Sort of like a teenage boy asking a girl out type of rejection. Pfizer who has been trying for some time now to buy the British pharmaceutical brand in an effort to better itself by having their headquarters in New York, and a tax base in London.

According to Reuters and New York Times, AstraZeneca Chairman Leif Johansson said “he had made clear in discussions with Pfizer that his board could only recommend a bid that was at least 10 percent above an offer of 53.50 pounds made by Pfizer on Friday, or 58.85 pounds.”

AstraZeneca has rejected four different proposals so far made my Pfizer, all because the valuation was too low, and they believed that because the buyouts were driven only by potential costs savings and tax minimizations. The workers of AstraZeneca might then have been laid off, even though Pfizer made assurances that it would not be doing that. But we all know how things change and adjustments have to be made accordingly, is the nicest way of putting it.

This latest rejection of around $55 pounds per share has made some top investors and investment management firms very dissatisfied. With one top-10 investor telling Reuters “We do not think the Astra management have done a good job on behalf of shareholders.” Alastair Gunn, from Jupiter Fund management also has a negative view of this rejection saying that “We are disappointed the board of AstraZeneca has rejected Pfizer’s latest offer so categorically. They should have at least engaged in a constructive conversation with Pfizer.”

In regards to the offer, Ian Read one of the Chief Executives of Pfizer told the Wall Street Journal “They can either accept it or reject it,” “They have until the 26th of May.” So it is a waiting game, will AstraZeneca start talks because it will see that this is the best option for it? Or will Pfizer do something that it said it wouldn’t and again raise their offer to start the takeover talks and move forward in the buyout plans.

Teenage drama on a billion dollar scale, will the pretty girl see that there is no one better out there, or will the guy keep trying to impress her and fold to her demands? May 26th isn’t Valentine’s Day, but it could be the day of romance in the pharmaceutical industry.

 

 

Volkswagen to Buy Out Scania for an Estimated $9.2 Billion

Volkswagen, one of Germany’s largest automobile manufacturers, looks to be set to acquire yet another auto company. They already own Audi, Bentley, Bugatti, Lamborghini, and Porsche, but it seems that the five companies are not enough. VW posses two-thirds of Scania stock and have just recently received the support of shareholders, equating to an estimated 90.7 percent share ownership. The German automaker has been trying for the last decade to incorporate a heavy-trucks unit into their operations. With this latest security to their endeavor, VW is now offer $9.2 billion for the minority shares in the Swedish car company.

They have hired Andreas Renschler, former Daimler truck chief, to take over the new acquisition. He comes with valuable experience as he spent almost a decade at Daimler running trucking operations that expanded across the globe. “Renschler is definitely the best man for this challenge with his global industry experience and a neutral approach toward the brands,” said Roman Mathyssek, an analyst at Strategy Engineers GmbH. He has restructured projects in the U.S., Japan, and Brazil as well as creating new markets in countries like China and India. Trucking has become a vital aspect of local and global trade. VW’s bid for Scania is a smart move. They already proven time and again that they know how to successfully integrate companies. Let’s see if they can do as well as they have with some of their luxury brands.

 

 

 

Courtesy Photo

AT&T MAY BUY DIRECTV FOR $50 BILLION?

Earlier this year Comcast acquired Time warner cable, now it looks like AT&T is looking to get in on the action. It is rumored that the company is interested in offering DirecTV $50 billion for the acquisition. Nothing has been made public yet and so nothing can be confirmed as the selling price may be subject to change. Mike White, CEO of DirecTV, may make the transition over to AT&T as a stipulation in the sell as well. Sales from both satellite companies have been less than stellar. ReconAnalytics analyst Roger Entner stated “They both see the Grim Reaper at the horizon. DirecTV hasn’t gone out and bought spectrum. Dish has, so DirecTV needs to find a partner, and AT&T  may be that partner.

AT&T is looking to make this deal so that it can secure its position as the lead satellite provider, just as Comcast is looking to do with cable. What this all really means is that consumers have less control. Though these mergers are not creating monopolies, they are definitely taking the power away from the customers. With less competition you will have to choose the lesser of two evils, and whether you’d rather have cable or satellite. Streaming and web based services are already incredibly popular and cheaper alternative. When satellite and cable company prices eventually get too high for you, consider services such as Netflix and Hulu for your viewing needs.