February 23, 2024
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The sudden awakening of antitrust regulators may be temporary


Just a few weeks ago, it looked like some of the crown jewels of tri-county commerce were about to change hands.

Simon Property Group was mounting a hostile takeover of Macerich, looking to add The Oaks, Pacific View and La Cumbre to holdings that already include the Camarillo and Pismo Beach shopping outlet complexes.

And media behemoth Comcast, owner of NBC/Universal and much of the cable industry in Northern California was in the final stages of getting approval to swallow up Time Warner Cable’s franchises in Southern California, including most of Ventura County.
But this is a year that’s being defined so far by the deals that don’t get done, rather than by the deals that close.

Objections by the Federal Trade Commission and the Justice Department sank the Comcast-Time Warner merger, although you might also argue that Comcast’s sometimes arrogant behavior toward consumers won it few friends in high places.
Simon Property walked away from its deal after Macerich installed anti-takeover provisions and after reported objections by larger store chains concerned about too many prime mall locations being in too few hands.

One conclusion from the two failed deals is that very late in the game, the Obama administration has discovered that the federal government actually has antitrust powers.

After largely ignoring the rules while utilities, big pharma companies, grocery chains and media conglomerates engaged in a feeding frenzy with just a few players in each industry emerging to dominate the landscape, suddenly the regulators have woken up.

Was that discovery due to the fact that the president is no longer running for office and no longer has to go to corporate giants and their PACs for campaign funds?

Is it that the administration has figured out that concentration of market power in just a few hands might be one reason why the economic recovery has been so weak?

Or is the U.S. taking its cues from European regulators who have looked at the enormous pricing power held by Google, Russian energy giant Gazprom and cracked down?

For the moment, it’s back to the status quo for cable television franchise and mall ownership, but my experience in these matters is that this is a temporary situation.

Macerich management is going to face tremendous pressure to do something to increase shareholder value and that means breaking up or buying back shares or going up for sale to the highest bidder.

Already, Comcast and sometime partner Charter Communications are talking about a Plan B, which might include breaking up Time Warner Cable into more digestible chunks — with Charter emerging as the dominant cable television player on the West Coast.

One of the persistent themes behind these two deals is the fact that in both cases they are about California properties. And for those of us who have noticed, California is mounting an impressive economic comeback with the Central Coast at the leading edge of that rebound.

The value of our franchises is only going to go up. Which means there is likely to be another deal lurking behind door No. 2.