Mega-Merger Dragnet

Just when you think the DOJ goons are over-policing some of the latest
mega-mergers, a handful of abuses by big business crops up that make you
stop in your tracks. Normally, I can’t trust my government to handle a
lemonade stand in this evolving capitalist environment, but desperate times
call for desperate measures.


Sure, I’ll be the first to admit that I take my share of guilty pleasure in
seeing big brother giving power-drunk corporate bigwigs the rubber-glove
treatment every now and again.


There’ll be a few companies who will fall under the dragnet that won’t
necessarily deserve it, but if it’s the price we pay in exchange for the
shady companies who do deserve it to get a little come-uppance, then it’s a
small price to pay.


Especially irksome are the ego wrestling matches taking place between
corporate giants that have unwitting consumers pinched in the middle. After
all, when the elephants fight, only the grass gets trampled.


The latest circus sideshow is under the big-top at Blockbuster
. The video rental chain is quibbling with
DreamWorks over a revenue-sharing agreement on its Academy Award
winning motion picture American Beauty released just last week.


A revenue-split with movie studios is customary in the video rental
industry that allows Blockbuster to shell out less money for each copy it
buys. In many cases, this split is so favorable that Blockbuster can afford
to buy more copies than it might ordinarily need to guarantee the new
release is in stock.


So how did Blockbuster choose to handle this latest disagreement? While
DreamWorks went against the grain, unwilling to bend to Blockbuster’s
demands, Blockbuster responded by purchasing fewer copies of the release.
Subsequently, the video rental chain ordered American Beauty off
their store’s shelves and hidden behind the check-out counter, forcing
customers to ask the store clerks for the title by name.


Blockbuster’s ridiculous public spin on the move is that by stuffing the
video behind counters, it will reduce consumer demand for a title that may
be out of stock. But even a blind man could see that these are common thug
tactics used to strong-arm a business associate who dares fall out of line.
As usual, the little guy draws the short straw. Hope everyone caught the
release in theaters last year.


It should come as no surprise to new investors that Blockbuster is owned by
Viacom , the world’s second largest media
conglomerate, next to only to Time Warner . The
giant owns CBS, MTV, VH-1, Showtime, and Paramount TV and movie studios,
just to name a few.


Power corrupts, while absolute power corrupts absolutely. Consumers would
do well to keep an eye on marriages between pipes and content. As
consolidation runs rampant, he who owns the pipes has the power to censor
content. He who owns both is an accident waiting to happen.


Time Warner foreshadowed a healthy example of this, with the same arrogant
tactics used in its fiasco with Disney last month.
And a developing pattern of abuse has caused regulators to examine these
mega-mergers more closely. But perhaps more importantly, it’s causing them
to show a little courage and squash some of these deals altogether.


Any questions or comments, love letters or hate mail? As always, feel free
to forward them to [email protected].

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