By Alan Murray and Geoffrey Smith
December 15, 2017

Good morning,

Will the antitrust cops block Fox’s sale of most of its assets to Disney? Traditional antitrust analysis would argue this one is more problematic than AT&T’s merger with Time Warner, since Disney and Fox actually compete head to head in some markets—controlling 39% of movie theater releases, for instance. Blocking AT&T-Time Warner while permitting Disney-Fox would be hard to explain (unless you happen to think—shocked!—that politics influences such decisions. Time Warner includes President Trump’s nemesis, CNN, while Fox is run by his favorite mogul, Rupert Murdoch.)

But the real issue here is that the FANG companies—Facebook, Amazon, Netflix, Googlehave made a joke of traditional antitrust enforcement, which is based on the notion of discreet marketplaces for different industries. Today’s digital giants, with their zero marginal cost economics, run roughshod over market borders. There’s hardly an industry left that doesn’t see Amazon as a threat. And who can blame Disney and Fox for combining in the face of Netflix’ voracious growth?

Today’s spate of mergers—whether Disney-Fox, AT&T-Time Warner, Aetna-CVS, or even Meredith-Time—serve to highlight the fact that digital economics have destroyed the economy’s equilibrium, and traditional regulators have no idea how to respond. They can choose to block Disney-Fox if they wish, but that won’t do much to solve the underlying problem. We need a new economic paradigm for the digital world.

More news below—and enjoy the weekend.

Alan Murray


You May Like