“The simplest answer for why Warner Bros. wants a merger is to cover for other failed mergers….These mergers created a horrific financial legacy: “$53 billion in debt as of 2022.”
He also lists the acquisitions that have led to the debt, including Time Magazine, America Online (AOL), Time Warner then being bought by AT&T, and Discovery Media.
What is ironic here is that Warner Bros. Discovery finds itself now as a victim of its own previous acquisition frenzy.
He adds that Warner recently received Golden Globe nominations for the films “One Battle After Another,” and “Sinners.” Also for the television series “The White Lion.” So it’s not like the company is in a downward spiral with new releases.
Dayden ends his article promoting separate companies between production and distribution.
What to Do
Why is Warner Brothers for sale at all? In this case, because there are more than one potential buyers. As far as I know it was not looking for a buyer. And each buyer feels confident that another big dollar acquisition will get approved by regulators.
In this chess game I have yet to read about what employees think of all this. Nor is there any input from customers.
IMO, federal anti-monopoly, anti-trust law violations should include a buyer’s acquisition history, including input from both employees and customers. Have previous acquisitions resulted in immediate mass layoffs? Is there documented evidence of customer dissatisfaction with either the product or service? Has money been invested in the acquisition or has it been ignored and left to die on the vine? Violations of these should also be codified to give judges broader reason for denying an acquisition. A company dying resulting from an acquisition is not in the best interests of our nation as a whole. This should be a bigger priority than one company’s private benefit.
A chess match with big players and high stakes, but employees may suffer.
The proposed acquisition between Skydance and National Amusements Inc., the parent company of Paramount, is a boardroom chess match with multiple players and multiple outcomes.
Paramount is owned by the parent company National Amusement, of which Sheri Redstone owns a majority percentage of voting stock. They operate such networks as BET, MTV, Nickelodeon and Paramount Films. It is also the parent of the CBS television network, which includes CBS News. Skydance was founded in 2010 by David Ellison. Its claims to fame have been producing “Top Gun: Maverick” and “Mission Impossible—Ghost Protocol.”
The Skydance-Paramount deal, with an enterprise value pegged at $28 billion, promises a major shakeup in the media landscape. Skydance Media, LLC, valued at $4.75 billion in the merger, brings its production heft—think Mission: Impossible—to Paramount’s storied assets, including CBS and the Paramount film studio. National Amusements Inc. (NAI) shareholders, led by Redstone, will pocket $1.75 billion plus the assumption of NAI’s $650 million debt, totaling a $2.4 billion enterprise value. Paramount’s Class B common shareholders are set to receive $15 per share. Funding comes largely from the Ellison family—Oracle founder Larry Ellison is contributing $6 billion—alongside $2 billion from RedBird Capital Partners. An October filing clarified that Skydance CEO David Ellison, not Larry, will hold 100% of the family’s voting interests in the merged entity.
This merger was first proposed in 2024. Talks originated, then were apparently cancelled by National Amusements, Inc. They resumed shortly thereafter. By July, 2024 the current deal was presented.
ROADBLOCKS
There have been several hurdles to overcome. In February 2025, Paramount Global and Skydance Media, LLC, received approval from the Securities and Exchange Commission. The deal soon after received approval from the European Commission, saying it presented “no significant competition concerns within the European market.”
It also needs approval from the U.S. Federal Communications Commission, which is still in play. Here is where it gets interesting. The FCC is currently headed by Brendan Carr, a recent Trump employee. Trump has been pressuring acquiring companies to back off/do away with Diversity, Equity and Inclusion (DEI) programs. Paramount recently announced they were doing just that. Mr. Trump had also filed a $20 Billion lawsuit against CBS News, claiming they edited an interview with Vice President Kamala Harris he claims was biased towards her and from him.
To add to the drama, Bill Owens, Executive Producer of 60 Minutes abruptly resigned last week. In The Last Minute segment of the April 27 broadcast of 60 Minutes, host Scott Pelley addressed his resignation. Mr. Pelley summed up his message by saying, “Bill felt he lost the independence that honest journalism requires.” There has been consolidation in the news media, along with the entertainment industry and the publishing industry. This consolidation will be addressed in a later article.
ANALYSIS
Consolidation in the entertainment industry is not as “crucial” as it is, say, with health care, insurance, groceries, housing. Indeed, there is competition with such companies as Netflix, Disney, Apple, Amazon, as well as network television, movies, theatre, concerts. However, what all companies involved in consolidation have in common is that there are both employees and customers whose livelihood is impacted, in different ways. Company working culture may significantly change for the worse. Customers may be faced with poor/indifferent customer service or continually rising prices.
SOLUTIONS
The proposed acquisition between Skydance and National Amusements Inc., the parent company of Paramount, is a boardroom chess match with multiple players and multiple outcomes.
Paramount seeks a buyer because it is hemorrhaging money, mainly due to cable cutters who are now streamers. They were slow to adjust to changing market conditions. They made some strategic mistakes. If Paramount is sold, Shari Redstone will come out well, as do some owners in the aftermath of blunders. If it is finally approved, the big continue to get bigger—in this case it would be Skydance Media, LLC. If it fails, National Amusements Inc. may have to sell off assets or face bankruptcy sometime down the road.
With all the drama, this would make for a good movie, wouldn’t it? I doubt if people who lost their jobs or faced a negative company culture would ever see it. What do you think?
Meta may have tried to neutralize a potential competitor
META
The Federal Trade Commission is beginning an anti-trust suit against Meta. This time it involves its owning What’s App and Instagram. Their argument is a monopoly exists with owning these acquisitions, they wanted to neutralize a potential competitor, and they should be spun off.
“The government contends that a “buy or bury” strategy propelled Meta’s acquisitions, leading Meta to gobble up competitors it viewed as threats, or to squash the rivals out of business altogether.”
It adds that an internal Meta email says they purchased Instagram to “neutralize a potential competitor” and the FTC believes this is against federal law.
The report says that Meta will summarize its argument that it is being punished for being innovative and aggressive, in other words…. successful.
According to Wikipedia, Meta/Facebook has acquired 91 companies, including What’s App and Instagram. They have also acquired an interesting company—Onavo. Onavo was an Israeli company in business to acquire and analyze data on a client’s competitors. Facebook has apparently used this to track successful startups for acquisition. The website www.onavo.com has a Facebook message that says something has gone wrong. Facebook changed it to Facebook Israel, which promotes travel to Israel. It has also apparently deleted numerous posts about Palestinians.
In 2010 Facebook posted a video available on YouTube. In it Mark Zuckerberg talks about the theory behind Facebook acquisitions. He says that Facebook, up until then, had acquired companies not to keep the company but to acquire the talent behind it. In other words, the owners become employees (once again) and the startup disappears. The official line is that this is growth to them. However, it is entirely possible to acquire good talent through direct hire, including through employee search, instead of going the acquisition route.
WHAT’S APP
According to Wikipedia What’s App was founded in 2009 by two individuals, Brian Acton and Jan Koun, previously with Yahoo! They received venture capital backing. They sold the company to Facebook in 2014. Acton left What’s App in 2017 over disagreements with Facebook. Later that year he founded the competing app Signal. Koun left the following year, also with conflicting issues with Facebook.
ANALYSIS
FACEBOOK
There is nothing wrong with companies like Facebook/Meta with being successful. This is Meta’s argument. However, the end does not justify the means in this case. Defining success through innovation – that which you started yourself from scratch – is not the same as defining it via acquisition. And if you have acquired 91 companies, that in and of itself should warrant charges of being a monopoly. I am not sure if people in the FTC under the Trump administration have a true anti-trust focus. Trump supporters seem to be focused more on going after the social media apps more for suppressing freedom of speech.
SOLUTION
Breaking up the acquisitions and returning them to independent status is, IMO, a good solution. This would return them to a position again of charting their own course. Meta will present their arguments, and some may have some weight. It really comes down to balancing the arguments and determining which has a greater priority.
The FTC’s argument is that Meta seeks to neutralize a potential competitor. If judicial decisions like this fail in the courts, federal law would need to be strengthened to make the anti-trust arguments more airtight. The law, for federal judges to agree, should be written such that it promotes what is in the best interest of the country as a whole, and not one just for individual business.
Private Equity’s track record with acquisitions should be basis for anti-trust
Hospital in Financial Distress
The impact of private equity’s expansion into healthcare is important.
On April 9-10 the PBS NewsHour broadcast a two part report on the effect private equity firms have had on the hospital industry. In this case it was on Cerberus Capital Management
Steward Health Care was once the largest private hospital system in the country. When the private equity-backed network filed for bankruptcy last year, it devastated providers and patients. Five of the eight Steward-owned hospitals in Massachusetts were salvaged by the state and two were shuttered.
Narrated by Paul Solman, it introduced the audience to Carney Hospital and Nashoba Valley Medical Center, both located in Massachusetts. They were purchased by Steward Heath Care, a subsidiary of Cerberus to manage its hospital purchases. They both closed after Steward acquired them, primarily due to not paying bills
People will come in for surgery. They couldn’t get the equipment. So they had to send them home. Sorry. It happened all the time. They owed so much money to creditors for equipment That they wouldn’t give them anymore.
Elaine Graves, Former Nurse at Carney Hospital
On the Steward Health Care website, they actually list the hospitals in Massachusetts and ones in Texas that were closed. It shows only one operating hospital, in Pennsylvania.
Make money, leave, make it however you want, make it for people who are invested in making money, and then you have got health care, which is all about delivering care to people. The cost is not the first thing. The delivery care is the first thing. And those two things do not mesh.
State Sen. Cindy Friedman (D-MA)
Solman provided some additional information on the history of private equity in the health care industry:
Steward bought 37 hospitals around the country. More than 450 hospitals nationwide have been taken over by private equity, as well as nursing homes, emergency rooms, doctor’s practices, and air ambulances. One analysis finds that private equity investors spent more than $200 billion on health care acquisitions in 2021 alone, and $1 trillion over the past decade.
Analysis
The impact of private equity’s expansion into healthcare is important. Hospitals are struggling through the country. When an outside buyer comes in with the possibility of infusing cash to get the financial position in shape, it may look like a good deal. If the acquired company is going bankrupt, and the private equity firm is earning profits, something is definitely wrong with this scenario.
There are several issues involved here. One is, are all private equity firms bad or are there just some bad performers. Related to that is, are there any private equity firms that have actually done a good job at creating a sound financial footing that employees/customers are happy with? If so, what is their business model? Hospitals are in financial straits because of their never-ending battle with insurance companies and discrepancies over payments. In addition, this situation with Steward Health Care also involves such issues as privatization, financialization, stakeholders versus shareholders and issues with small towns.
The history of a private equity’s acquisitions should be a basis for anti-trust violation. Acquisitions that have either failed or gone into debt and bankruptcy are sold off as a tax write-off, there is something wrong here. This is not capitalism. There should be a law that required the private equity company itself to assume the debt for its acquisitions. More on this will be coming in the later months.
Past anti-trust pursuits may stall or stop this buy from going through
Google announced on March 18, 2025 a $36B (B as in billion) acquisition of Wiz. They are a relatively new startup involved with cybersecurity.
Google is technically a subsidiary of Alphabet, the parent company that owns Google and all the other acquisitions.
This would be Alphabet’s largest payout for an acquisition.
This acquisition was attempted just last year in July. Wiz declined the then offer of $23 billion, saying they wanted to pursue an initial public offering.
This acquisition plans to undergo federal anti-trust scrutiny. A major reason is that over the years Google has acquired a boatload of companies. According to Wikipedia, the total is a staggering 261! Some of those bought are You Tube, Fitbit, Android, reCAPTCHA, Invite Media, Skybox Imaging, Dropcam. Google is technically considered one of the acquisitions, thus under Alphabet. The question here is, does a company with over 250 acquisitions qualify as a monopoly?
Alphabet has a history of anti-trust pursuits, and not all by the U.S. government. Most of these have been over Google’s perceived monopoly over the search engine market, including entering into exclusive agreements with device manufacturers to provide its browser. A separate lawsuit focuses on its digital advertising platform. Not only by the U.S. federal government but also European governments as well. My argument is whether Google has created a monopoly based solely on its acquisitions.
ANALYSIS
What’s wrong here? How can you avoid being slapped with the name of oligarch if you have over 250 acquisitions? How can you avoid this scene being labeled as a monopoly? Does your company have over 100 acquisitions, let alone 250? Is acquisition the only way for Google to “grow?”
If Google needs improvement with cybersecurity, can’t they develop their own? Or they could form a partnership. Or they could simply purchase the service as a customer. These other companies could still exist as independent entities. Why does Wiz and hundreds of others have to be “acquired”. Alphabet may have legitimate evidence to justify it. However, theirs is not the only valid point of view here. It then becomes determining which valid argument takes priority.
POSSIBLE SOLUTIONS
Have Alphabet pay an annual acquisition tax for every acquisition they have made. The idea here is not to slap a tax on simply being large but on specific behavior.
Provide “incentives” for Google and the other Big Tech companies to divest their acquisitions on their own. Divestiture is something recently pursued by both General Electric and Honeywell.
If the courts rule that Google is not a monopoly, laws need to be rewritten so the courts can rule based on specific statutes and not on wide interpretation.
This proposed acquisition will be interesting to follow in the coming months. Future articles here will explore further the idea of defining “growth” as well as this pursuit of divestiture.
This is a classic example of what’s wrong with mergers and acquisitions today.
On January 7, 2025, Cintas Corp. announced a $5.3 Billion offer to purchase rival UniFirst. Both companies’ core business is corporate uniforms. Cintas is headquartered in Mason, OH, over 20 miles north of Cincinnati. UniFirst is in Wilmington, Massachusetts.
This proposed acquisition has an interesting history. Cintas proposed acquiring UniFirst in February 2022, but the offer was rejected. Management has now rejected this second offer.
“We call on the UniFirst board, its controlling shareholders and management team to immediately engage with us to reach a mutually acceptable definitive agreement that delivers the full value of this combination for shareholders and other stakeholders…We firmly believe in the compelling strategic fit between our two companies, and our offer would deliver immediate and compelling value to UniFirst shareholders…The combination would also amplify the benefits of Cintas and UniFirst’s ongoing technology investments to drive growth and benefit our collective customers and employee-partners.”
UniFirst issued a response, saying:
“The board conducted a careful review of the unsolicited proposal and determined that it is not in the best interests of UniFirst, its shareholders and other stakeholders,” adding the decision was made based on the offer price, business risks and feedback from its largest shareholders.
Cintas
Cintas is 3½ times larger, with $9.6 Billion in revenue, versus $2.7 Billion for UniFirst. UniFirst has an interesting strategy, though, to fight back.
UniFirst posts on its website suggestions directed at customers of companies acquired by Cintas to consider switching to them. And there is more than one company listed. How about that!
Cintas’s approach to acquiring UniFirst is a classic example of what’s wrong with mergers and acquisitions today. It is a business chess game where the opponent is forced to play.
If someone came out of the blue to tell you what is in your best interest, would you like that? Is this a way to win friends and influence people? I know that many people preach about the benefit of “persistence”, but in this case “persistence” is really bullying, isn’t it?
If a company’s management is actively pursuing an acquirer, do their homework and find “the right fit”, that’s one thing. A merger may be a better option than an acquisition, though. In this case bullying tactics are used where the only real question the acquirer asks is “what’s in it for me?”
Cintas’ approach to its employees is totally different to its acquisition process, isn’t it? It is like they act as a Jekyll and Hyde company. Do you believe companies should engage in bullying tactics with their competition? Is this how you operate? Does the end justify the means here?
Health Care Acquisitions contribute to the large CEO Compensation Gap
We need to further explore actions taken by United Health, and the connection between health insurers CEO compensation and their acquisitions.
Brian Thompson
Brian Thompson’s death on December 4, 2024, captured much attention, both for the murder and hateful backlash against United Health Care.
Before proceeding, I want to say that IMO, the end does not justify the means here. On my home page I argue it is important to focus on HOW things are done, not just on the end result.
It is important to note that Mr. Thompson was the CEO of United Health Care, but Andrew Witty is the CEO of the parent company, United Health Group. Also, Tim Noel has recently been appointed to replace Mr. Thompson.
United Health Care
Fortune 500 magazine has United Health Care in the top 10 of 500 companies, ranked by revenue, for 2023.
ProPublica reports they have been criticized in the past for denying coverage of mental health claims. According to the article, UHC had been using algorithms instead of reviewing all claims independently.
United Health is not the only one to do this. EviCore by Evernorth, owned by Cigna is the major player here, providing decision-making services to multiple health insurers based on algorithms.
CEO Compensation
Insurance Business magazine provides data on the CEO compensation by the top health insurers in the United States. It includes CEO compensation and the ratio between that and the salary of the average employee. Published in November 2023, it is based on statistics provided by the National Association of Insurance Commissioners. Here are the top 5 earners:
United Health Group is reported to have made 25 acquisitions, spending over $36 Billion for them. That’s B as in Billion. Its largest has been Change HealthCare. Hovering over some of the other company names you will find links to their acquisitions as well. If United Health Care had not made these acquisitions, do you think they would be as big as they are today? Same with the others. If they had taken that $36 billion and invested it on R&D, better coverage or on increasing employee salaries, do you think that ratio would be as big as it is?
The Economic Policy Institute has recently released a report of CEO compensation since the 1970s. It spiked in the 1990s when Mergers and Acquisitions began to take off beginning (but not ending) under the Clinton administration.
What Can Be Done
I do not have the resources that institutions have to crunch the data and spit out results. A direct relationship between acquisitions and income inequality between CEO and average employee, in my opinion, may exist. This may “contribute” and not necessarily “cause” this inequality. There may be other factors that contribute, such as CEO pressure on corporate boards to increase compensation.
What can be done here? One would be for Congress to institute an annual “acquisition tax” on the top companies with the largest number of acquisitions. Or have the Federal Government break off companies that have been acquired. Another could be tax incentives to encourage “divestiture” or to block future acquisitions being made. Also, prohibit future acquisitions.
One thing that shouldn’t be done is for individuals to take it upon themselves to attempt to assassinate executives or to celebrate it. As a result of this act some people lost a family member and others lost a colleague. Nothing changed for policy holders…. did it?
What Do You Think?
What do you think? Is there a connection between acquisitions and the size of CEO compensation? Should algorithms be the main source for accepting or rejecting claims? Do you have a problem with this? Has not only the compensation gap but the physical barriers between the decision makers and customers grown too impersonal?
Achieving power over others through consolidation does not justify pursuing growth.
Make America Great Again…
That is a great campaign slogan, no matter what your opinion is of Donald Trump. However, he seems to define it in mainly terms of removing illegal aliens and implementing tariffs. I also would like to make America great again, but focus in a different direction
This America still exists but not in the numbers some fifty years ago. Beginning in the 1980s numerous industries began to go down the road of consolidation. For acquired private firms it often resulted in a major culture shift. For publicly traded companies, an acquisition was often sold as to what was in the best interest of shareholders. In the last 50 years many shareholders for public companies are mutual funds, pension funds, and other investment firms that have only a financial and not personal interest in the firm. This strategy has often been at the expense of employees, customers and communities. These three have also been at a similar disadvantage at some privately held companies too…. (Contd. – page link below)
