Category: Free Enterprise

The Core of American Capitalism

Human interaction is an overlooked part of capitalism defined

In the News

I see where Warner Bros. Discovery is giving the Paramount offer a second look at being acquired.  Paramount initiated this acquisition pursuit way back in September, 2025.  It has gotten much media attention, in the national news outlets as well as the business news.

If someone was not a student of economics and relied on the news media for his or her information, you may get the impression that this acquisition, and other big ones that get media attention, are the center of our economic system.  In addition to this acquisition, there is also the constant chatter of how Big Tech is investing umpteen dollars in artificial intelligence.  This sure has had an effect, both positive and negative on the stock market recently. 

Where is this Core?

In my opinion, it started with thousands of men and women throughout the decades who, with some material and financial resources combined with inspiration, went on to create great companies, both large and small,  throughout this country.

I remember reading how both Apple and Microsoft got started in garages.  There is also Walt Disney starting out creating a Mickey Mouse cartoon called “Steamboat Willie.” 

However, since 1980 there have been individuals and companies involved in directions that have shifted much of our economy away from innovation and more about domination.  We have been introduced to such things as investment banks, leveraged buyouts, corporate raiders, hostile takeovers, private equity, private credit, stock buybacks, Pac Man defense, activist investors.  In my opinion they have all immensely deviated from this basic core.

The people involved in these activities are far away, literally and figuratively, from many people found on Main Streets throughout this country.  family and friends may work for local or regional businesses, where upper management has regular face-to-face contact with both employees and customers. 

This personal, human interaction is, in my opinion, where you find the core of our capitalist system.  Laws and tax reform should be in place to help keep businesses independent who want to be independent.  Legislators should give primary attention to small business issues more than corporate campaign contributions. Large corporations are not inherently bad, but the distant relationship between management and employees and customers located hundreds of miles away or across oceans, reduces these people to being mere statistics on paper or a screen.  Decisions can thus be made without the decision makers having any personal interaction with those on the front line.  Decisions based on statistics is important but should also include the personal input from employees and customers.

Final Thoughts

I have written before wondering what is going through the minds of Warner employees with all this acquisition talk.  Customers are also faced with the thought of less entertainment choices and possibly higher costs.  This is high dollar negotiations with huge financial consequences for everyone involved.  Fees and profits are to be earned by some, maybe not all.  Careers may also be on the line.   It is all very important.

It makes for high drama and entertaining news headlines, but has consequences.  Such corporate wheeling and dealing is far removed from what occurs on Main Street America.  Some may call this capitalism, and they may find sources to back that up.  But, in my opinion, this corporate world contributes to the decline in some American’s belief in the capitalist system. 

What do you think?

Hostile Takeovers – How to Cease Hostilities

Businesses need help from wasting time and money on this.

In the News

Paramount continues to pursue Warner Brothers Discovery, though management has clearly indicated the Netflix deal is in the company’s best interest.

At the same time, Cincinnati based Cintas Corporation has announced a third attempt to acquire Massachusetts-based UniFirst.  Both companies provide employee uniforms and related services but in separate parts of the country.

What is the link between the two?  They both involve using the tactic known as the hostile takeover.

Definition

A hostile takeover is an acquiring company seeking to obtain control of another company, often a competitor, against the recommendation of either senior management or the board of directors.  The pursuer will sometimes appeal to the shareholders directly to force a vote on the bid. 

This tactic was used by Standard Oil Company to acquire refineries a century ago.  Since the Depression it was rarely used until the 1980s.  The Reagan administration pursued deregulation, which led to a different, and sometimes aggressive, approach to corporate governance. 

Anheuser-Busch

One that made headlines in 2008 was the acquisition of Anheuser Busch by Belgian-based InBev.  It is now known as AB-InBev, which is now the world’s largest brewer.  By the way, it was the world’s largest brewer PRIOR to the acquisition.  During negotiations InBev promised not to close any breweries, but it did not promise to maintain current employees.  As a result, some 1,400 jobs were eliminated—jobs perfectly legitimate one day were now gone the next day.

Analysis

In my opinion, hostile takeovers deviate far from the founding principle of capitalism.  That principle is having an idea for a product and service and acting on it in an environment where those ideas can become real and make a profit.  Having to battle competition is also part of this principle.  Hostile takeovers are nothing more than a power grab meant to either dominate the market or specific companies.

Some may argue that they are pursuing growth.  They also argue that some companies are bloated and inefficient and an outsider needs to come in and straighten things up.  Nothing wrong with pursuing growth.  But growth can (and should primarily) be pursued through internal research and development.  As for inefficiencies, some companies may have them.  But they should be urged to change through persuasion rather than bullying tactics.  Some may not change, and they may fail.  Business failure is also a principle of a capitalist economy.

How to stop this

Some pursued companies have adopted tactics known as a “poison pill,” meant to provide roadblocks.  An example would be issuing additional shares to existing shareholders, thus making it difficult for the acquirer to obtain a majority stake.

The federal government could also create a law that would allow the victim to declare a hostile takeover has been pursued.  The aggressor would then be prohibited by law from making any further attempt to acquire the other.  If the victim does not declare, the pursuit may continue.  This would allow the pursued to keep its resources and not waste either time or money with lawyers to try and fend it off. 

Does this make sense? 

Should this not be pursued?

SKYDANCE-PARAMOUNT Merger – More than Just News

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 DEAL

According to Cord Cutters website, here are the details of the deal:

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?

Independent doesn’t mean you have to go it alone

There are organizations that can help the independent thrive as independent

There are organizations that can help the independent thrive as independent

Are you an independent business?  Do you want to stay independent?  Does your independence feel threatened by those that are bigger than you?

One is the National Federation of Independent Business (NFIB).  Their motto is as follows:

We are a nonprofit, nonpartisan, member-driven organization that advocates on behalf of America’s small and independent business owners—both in Washington, D.C., and in all 50 state capitals.

They are a business advocate, gathering member opinions nationwide in order to steer policy priorities.  They focus on taxes, healthcare, labor and regulations.

They also focus on competitiveness, working that both government and massive businesses make it impossible for them to compete.  Their website has a video on their anti-trust advocacy.

Another institute is the Center for American Entrepreneurs.  Their motto is as follows:

CAE is a nonpartisan Washington, DC-based research, policy, and advocacy organization that works with policymakers at the federal, state, and local levels across the country to build a policy environment that promotes new business formation, survival, and growth. We pursue this objective through a wide range of activities

They work in advocacy through an Advisory Council and provide issue analysis through a Research Council.  They also have a Board of Directors made up of entrepreneurs, startup investors and startup mentors.

There is also the U.S. Small Business Administration.  Their historical role has been to approve small business loans.  However, they are also involved with small business disaster relief.  In addition, their website provides links to various issues with starting a business, including how to win federal contracts. 

In  December, 2016,  Forbes magazine published the article, “43 Reasons You Should Support Small And Independent Businesses.”  They are primarily quotes from small business owners themselves.  If you identify with one or more of these, you may want to start a campaign to promote them to the general public.  In addition, they offer an Entrepreneurs and Small Business newsletter you can sign up for.

Cintas abandons pursuit of UniFirst

Tactic of pursuing hostile takeover fails

As a follow up to the article “Cintas and UniFirst’s Visions aren’t Uniform,” the Cincinnati Business Courier reported Cintas has dropped its bid for UniFirst.

In my opinion growth can be pursued by other means than acquisition. I heard this proposed acquisition referred to as a “hostile takeover,” which indeed it may have. These takeovers were often pursued years ago, made popular in the film, “Wall Street”. They do more harm than good.

Further articles will pursue this idea of growth and options available that companies can use to pursue it. Once again, the end doesn’t justify the means here.

AMERICA IS NO HUMPTY DUMPTY

It can be put back together again. Small businesses lead the way.

In the March 2016 edition of The Atlantic , author James Fallows wrote an article asking the question, “Can America Put Itself Back Together?”  It took him 14 pages, but his answer to his own question was an unhesitant “Yes.”

His was a journey, mostly by air, across the lower 48 to search for his answer.  He visited mostly small towns (cities that do not have major league sports teams), such as San Bernardino, CA, Duluth MN, Redlands, CA, the “Golden Triangle” of Columbus, Starkville, & West Point, MS, Holland, MI, and Sioux Falls, SD (and others.)

He reported how small businesses are providing the economic Renaissance in America.  He writes:

John Dearie, a co-author (with Courtney Geduldig) of Where The Jobs Are, argues that new business formation is the single most important guide to future employment trends.  This is because of the unlikely sounding but true economic observation that, over decades, all the net new job growth within the U.S. economy has come from firms in their first five years of existence (and mainly from fast-growing ones in their very first year).  Big established firms…employ a lot of people.  But the increase in jobs, overall, statistically comes from new firms, as they go from no employees to the first dozen or hundred.

America’s economic renaissance rests on a foundation of companies that are innovative, independent, and competitive with one another.  Taxes and regulations should allow these companies to exist and thrive and not be concerned with fighting off manipulative tactics from larger firms.