Money Quote Friday Nov. 10
The contradictions are rife in the FCC’s latest regulatory framework, and did Justice seek revenge on CNN?
In a New York Times OpEd (apparently he’s OK with purveyors of “fake news”), FCC Chair Ajit Pai makes a case for loosening rules that bar cross ownership of print and broadcast media assets. And on its face, his arguments make sense. But look closer. Pai is arguing that the Internet provides more diversity of views, and that when a TV station owns a paper, the community gets more investment in news gathering, reporting, and coverage. Maybe, but he’s ignoring the real issue at hand: That “diversity of views” so dear to past regulators is pretty much dead and buried on the Internet, where filter bubbles, marketing algorithms, and sophisticated information warfare ensure most Americans see only what they already believe, and ownership is concentrated beyond anything we’ve seen in the offline media world. And guess what? Earlier this year, the FCC shrugged off responsibility for any regulatory power over the Internet. Money quote: “In 2003, this newspaper noted on its editorial page that “making the argument that the current rules are outdated is easy.” The case is even stronger today. Few regulations are more disconnected from today’s realities than the F.C.C.’s media ownership rules.”
Did President Trump ask the Department of Justice to punish CNN by forcing AT&T to divest the news network so its acquisition of Time Warner would be approved? Sounds nuts, but that’s exactly the kind of thing our current president seems capable of doing. AT&T isn’t taking this one lying down, and is threatening to sue. Now that’s a court case I’d like to see! Money quote: “Randall L. Stephenson, AT&T’s chief executive, said on Wednesday that he had never offered to sell CNN. On Thursday, appearing at The New York Times’s DealBook conference, he said the company was ready to go to court against the Justice Department.” Counterpoint: Tim Wu argues blocking the deal might be a good idea.
Dara Khosrowshahi is wasting no time putting his stamp on Uber. He gave his first public interview as CEO yesterday, and while the headlines focused on his support of the Softbank financing deal and a possible IPO in 2019 (no sh*t, of course he’s going to take it public), the more interesting tidbits are found in how he navigates giving Uber’s founder credit for what he built, while at the same time owning the shitshow the company became under that founder’s rule. Money quote: ““The culture went wrong, the governance went wrong, the board went in a very bad direction,” Mr. Khosrowshahi said in conversation with Andrew Ross Sorkin at the DealBook conference on Thursday. “I think winning gives some excuses for bad behavior.”
China dwarves any other market when it comes to the Internet, and once a year, the Dragon Kingdom proves it. “Singles Day” — 11/11, get it? — is the equivalent of a made up Hallmark holiday, but it’s taken off like nothing else in China. More than $24 billion will be spent this year, according to this Quartz story. Money quote: “During last year’s Singles Day, Alibaba alone racked up almost $18 billion in sales, dwarfing Cyber Monday ($3.4 billion) and Black Friday ($3.34 billion) combined.”
Here’s the founder and CEO of a major food chain taking a very public bow to focus his considerable fortune and talent on the biggest structural imbalance of western capitalism: Short term profits. Anyone know him? I’d love to have him come to Shift Forum. Money quote: “I speak as one of the most successful CEOs of the last 26 years,” he continued. “I’ve been a CEO longer than Cal Ripken played baseball. And yet I can tell you: Short-termism has pervaded capital markets.”
Luke Kanies kicks off a new series examining the venture capital industry with a core insight: Taking venture means you will either fail, or do what the VCs tell you to do. Money Quote: “Crucially, that means that investors must push you into one of those outcomes. The reason they deride private businesses that generate cash isn’t because they’re bad businesses, it’s because they’re structurally incapable of profiting off of them.”