March 20, 2023

German Cable Merger in Doubt After Court Orders a Review

DÜSSELDORF, Germany — A regional court in Germany reversed the antitrust regulator’s approval for Liberty Global’s 3.2 billion euro acquisition of KabelBW, throwing the now-completed merger into doubt.

The court in Düsseldorf ruled that the German regulator would have to look at the case again and either block it or apply stricter conditions to its approval.

The $4.2 billion merger, which was approved in 2011 and completed in early 2012, could ultimately be unwound, rattling a sector already undergoing major changes.

The cartel office said it would study the ruling before deciding about any further steps. It had imposed far-reaching conditions on the deal because Liberty already owns Germany’s second-largest cable operator, UnityMedia.

Germany’s biggest telecommunications group, Deutsche Telekom, had challenged the approval decision. The court had already voiced concerns over the deal in a June hearing.

The court did not allow its decision to be appealed, but UnityMedia can file a complaint with a higher court, Germany’s Federal Court of Justice, to be allowed to appeal.

“The merger implies that KabelBW as the only potential competitor has been taken out of the market,” Jürgen Kühnen, the court’s presiding judge, said. “Potential competition has been eliminated.”

UnityMedia said it would use all legal means available to fight the court’s decision.

Frederik Wiemer, an antitrust lawyer not involved in this case, said the court had looked at several regional markets in Germany, whereas the cartel office came to its decision after mainly considering the national market.

“Certainly this ruling will have dramatic consequences,” he said. “If this decision is upheld by a higher court, the merger will have to be unwound. I wonder whether this is actually possible.”

Liberty Global and the German cable industry leader Kabel Deutschland, which Vodafone agreed to buy for 7.7 billion euros in June, have been winning customers from Deutsche Telekom with their expansion into broadband.

Their cable lines, meant to deliver television to homes, have been upgraded to carry voice calls and Internet at speeds often five times faster than competing services offered by Deutsche Telekom and others.

Liberty has been the most active buyer in Europe in the last few months, snapping up Britain’s Virgin Media in February and increasing its stake in the Dutch group Ziggo.

Article source:

US Airways Shareholders Approve Merger With American Airlines

The Justice Department and attorneys general from 18 states are still reviewing the deal, as are European Union officials, to see if it would create monopoly service on some routes.

The merger, an all-stock deal that has been valued at $11 billion, is the latest in an industry that has undergone substantial consolidation, leading to the mergers of United and Continental in 2010, Delta Air Lines and Northwest in 2008, and Southwest Airlines with AirTran in 2011.

US Airways said in a statement that more than 99 percent of the shares that were voted on Friday supported the merger. US Airways shareholders will have a 28 percent stake in the combined airline.

American has been in bankruptcy since November 2011, and final approval of the bankruptcy court is also required for the merger. The new airline would keep the American name and remain based in Fort Worth. American’s creditors would own 72 percent of the combined airline.

W. Douglas Parker, the chairman and chief executive of US Airways, said at the annual shareholders’ meeting on Friday that the combined airline would offer more than 6,700 daily flights to 336 destinations in 56 countries. He said it would offer customers more choices as well as provide cost savings for the airlines.

But the Government Accountability Office, a research arm of Congress, said in June that the merger would reduce competition in a far larger number of airports than earlier airline mergers, including the one that created United Continental.

The report found that 1,665 routes between cities would lose one competitor as a result of the merger, affecting more than 53 million passengers. A new competitor would be created in 210 routes, affecting 17.5 million passengers. The report added, however, that the great majority of those markets still had “effective competitors.”

Article source:

DealBook Column: But Wait. Didn’t Yahoo Try a Deal Like This Before?

GeoCities' employees in 1999, after Yahoo bought the company for $3.6 billion.Mark J. Terrill/Associated PressGeoCities’ employees in 1999, after Yahoo bought the company for $3.6 billion.

When Yahoo announced its headline-grabbing acquisition, it boasted that the deal gave it access to an “unduplicated” audience of users and that its target was a “popular personal publishing” platform.

“Yahoo will be able to integrate and distribute a powerful set of state-of-the-art editing tools and content published through personal home pages in an array of services,” the company declared.

But Yahoo wasn’t talking about Tumblr. Those quotes came from a news release Yahoo issued in 1999 when it acquired GeoCities, which allowed users to create their own Web pages — not unlike Tumblr — for $3.6 billion in stock. The site was closed in 2009.

As investors and analysts size up Yahoo’s latest $1.1 billion acquisition, it is worth reflecting on the GeoCities deal, which has many similarities. Both companies were money losers when they agreed to be acquired. Tumblr had just $13 million in revenue last year, according to reports.

DealBook Column
View all posts

Both companies had loyal followers that quickly left in droves. According to Matt Mullenweg, the founder of WordPress and a competitor, Tumblr users were moving their posts over to WordPress at a rate of 72,000 an hour amid speculation of an impending deal this weekend. (Usually, he said, Tumblr users migrated 400 to 600 posts an hour). Still, for perspective, Tumblr users generate tens of millions of posts a day.

And GeoCities and Tumblr had at one point been averse to accepting advertising. Tumblr’s 26-year-old chief executive (and now multimillionaire), David Karp, said three years ago, “We’re pretty opposed to advertising,” adding that “It turns our stomach.”

The lesson of GeoCities raises this question about Tumblr: How can a company with zero profits (actually, multimillion-dollar losses) and just $13 million in revenue be worth $1.1 billion?

Inside Yahoo, officials dismiss the comparison to GeoCities. Instead, they compare the Tumblr deal to Google’s purchase of YouTube — that is, Yahoo’s management believes that Tumblr is one of a rare few transformative sites on the Internet. Google paid $1.6 billion for YouTube when it too made no money. At the time of that deal, it seemed heretical. Now, it seems genius.

To Yahoo, Tumblr is the equivalent of beachfront property. With more than 100 million user-generated blogs on Tumblr, there is no question that it brings Yahoo a younger audience. It adds a sense of hipness to a company that had lost its sense of cool.

According to Marissa Mayer, Yahoo’s chief executive, who drove this deal, Tumblr brings Yahoo a possible growth engine for the future.

But that’s a big if. It requires Ms. Mayer’s team to execute brilliantly and online users to continue to want to establish ways to communicate outside of places like Facebook and Twitter.

And then there is the pesky issue of selling ads on Tumblr’s pages without upsetting the site’s finicky users. (One user began a petition to block the deal.)

“It is difficult to justify the premium acquisition price for Tumblr given its low levels of revenue,” wrote Anthony DiClemente of Barclays Capital in a note to investors. “In addition, we believe Yahoo needs to be careful about the manner in which it monetizes Tumblr, as a significant ad load and the perception of a large corporate owner could potentially alienate Tumblr’s core user base. Though we believe Tumblr’s model does have switching costs for users, we do not view its actual barriers to entry as particularly high.”

If you want to do the math on what it would take for Yahoo to justify the price tag, Brian Pitz, an analyst at Jefferies, has sketched it out. By his count, Yahoo will need to figure out a way to make $127 million a year in profit from Tumblr, meaning the site would have to bring in an additional $950 million annually in advertising revenue.

That’s a big challenge, especially considering that Ms. Mayer pledged that while she planned to add more ads to Tumblr, she would do so mostly on the site’s “dashboard” or newsfeed.

“We would like to look at them and understand how we could introduce ads — in a very light ad load — where the impact is really created, because the ads really fit the users’ expectations and follow the form and function of the dashboard,” Ms. Mayer said.

She said she might add advertising to user pages, but only with the permission of the blogger. That means a lot of Web pages will not be monetized.

And there is the issue of porn. Yes, porn. At least some of Tumblr’s users post images that are not exactly “work safe.” Indeed, Tumblr’s own terms of service allows for such content. Such content could make Tumblr a challenging environment for advertisers.

Tumblr’s users also regularly post copyrighted images and other content Yahoo will have to find a way to police. When Tumblr was just an upstart, content owners were unlikely to pursue claims against the company, but now that it might be owned by a big public corporation, you can bet that copyright owners, some of whom compete with Yahoo, will be contacting their lawyers.

Given all of that, you might expect me to say that Yahoo should have never proposed acquiring Tumblr. But I won’t.

It may actually turn out to be the right bet. The key is recognizing that it is a shoot-the-moon gamble. It might work out. It might not.

And even if it does not work out, analysts note that Yahoo can afford to experiment given the billions of dollars it has in cash.

As Jordan Rohan, an analyst at Stifel Nicolaus, wrote: “Even a squandering of $1.1 billion in cash, however unlikely that might seem to Yahoo management, would only move the sum-of-parts slightly.”

This post has been revised to reflect the following correction:

Correction: May 21, 2013

An earlier version of this column misidentified an analyst from Barclays Capital who commented on the transaction in a note to investors. He is Anthony DiClemente, not Doug Anmuth, who is an analyst for JPMorgan Chase.

A version of this article appeared in print on 05/21/2013, on page B1 of the NewYork edition with the headline: But Wait. Didn’t Yahoo Try A Deal Like This Before?.

Article source:

Bucks Blog: Average A.T.M. Surcharge Reaches New High

A woman uses an ATM in Atlanta.Associated PressA woman uses an ATM in Atlanta.

It’s getting more important to consider the size and scope of your bank’s network of A.T.M.’s if you use them frequently.

An annual analysis of checking accounts from finds that the average A.T.M. surcharge — the fee charged by the machine’s operator to a noncustomer — rose 4 percent to a new record of $2.50.

This is the eighth consecutive year that the average surcharge has increased. And, for the first time, all of the banks surveyed by for the report charge noncustomers to use their A.T.M.’s.

The increases are part of an overall attempt by banks to replace fee revenue lost because of new caps on the amount they can charge retailers for debit-card transactions.

The surcharge gets even more expensive when your own bank gets into the act, charging you — its customer — for using a competitor’s machine. This fee rose 11 percent, to $1.57.

For a customer encountering both fees, the average total of $4.07 is also a new record. It is up almost 7 percent from last year.

What steps do you take to avoid A.T.M. surcharges? And what’s the biggest one you’ve ever paid?

Article source:

DealBook: Macy’s to Review Martha Stewart Relationship

Macy’s is raining on Martha Stewart‘s parade.

The retailer said Wednesday that its relationship with Martha Stewart is under review. The decision comes after news that rival J.C. Penney is buying a 16.6 percent stake in Martha Stewart Living Omnimedia.

Ms. Stewart has several exclusive product lines at Macy’s, including cookware and bed linens, and is a star of their ads.

But with the J.C. Penney deal, she has promised products and marketing heft to a major competitor. In a note to clients, Paul Lejuez, an analyst with Nomura, said the new line, to be introduced in February 2013, should help Penney’s take market share from Macy’s, along with Kohl’s and Target.

In a tart statement, Macy’s suggested that the brand had gotten too ubiquitous.

“In light of the proliferation of Martha Stewart-branded product in the marketplace, Macy’s is reviewing the Martha Stewart products sold at Macy’s for potential changes in the future. No decisions have been made at this time,” the statement said. It added that the Martha Stewart products will be available at Macy’s “until further notice.”

Article source:

$97 in New York but $40 in Las Vegas: Making Sense of Car Rentals

The cost of doing business in different markets is a big factor — including labor, real estate and the price to insure a fleet of cars. Varying tax rates can also affect the final bill, especially in places that levy special taxes on car rentals.

But the number of car rental companies that serve a particular market also plays a significant role in price. And competition is a growing issue as the industry consolidates and leaves just a few dominant companies that each own several car rental brands.

Jonathan Weinberg, president of the car rental agency, analyzed September midweek rentals booked through the site and found customers were paying about $97 a day in New York City, including taxes, versus $40 in Las Vegas and $45 in Miami and Los Angeles.

“In somewhere like Los Angeles, you have so many different vendors at the airport, and many are low-priced value providers,” Mr. Weinberg said. “There’s so much competition for customers, it tends to drive prices down.”

In Miami, which recently built a combined rental car center near the airport, 16 companies compete for customers, including more than half a dozen discounters like Payless, Advantage, E-Z Rent-a-Car and Ace. Being in the same place puts the low-priced providers on more of a level playing field, since travelers take the same bus to get to the building and do not have to wait longer for a company that cannot afford frequent bus service. A new train running from the Miami airport to the rental car center replaced the bus last week.

Another competitor in Miami is Sixt — a German company that has locations worldwide but is just gaining a toehold in the United States.

“The new consolidated Miami rental facility provided Sixt an opportunity to get in there,” Mr. Weinberg said. Other cities that have at least 11 car rental companies at their airports include Los Angeles, Phoenix and Fort Lauderdale, Fla., whereas there are only six companies at Kennedy International Airport in New York, all major brands.

Richard Broome, a senior vice president with Hertz, acknowledged that the company reacted to rates set by competitors, especially the discounters that compete with Hertz’s Advantage brand.

“The more competitors you have in a market at an airport, the more pricing competition you would expect,” Mr. Broome said, though he also cited operational costs and basic supply-and-demand issues as rate factors.

“The price to rent a car in Denver around President’s weekend will typically be more expensive than to rent that same car in Cleveland,” he said.

Local taxes are another important variable in price differences — and one that has been getting more scrutiny as the travel industry fights municipalities that tax visitors to help pay for new stadiums and other projects that do not necessarily benefit travelers.

A study of travel taxes published this spring by the Global Business Travel Association, an association of travel managers, found that Chicago O’Hare, Boston Logan, Las Vegas McCarran and Kennedy airports levied the highest taxes on car rentals — adding 20 to 25 percent to the base price of the car.

Despite this growing tax bite, one bit of good news for travelers is that car rental rates have actually declined from their 2009 peak.

“It’s not like the price of a car is dropping through the floor — it isn’t,” said Neil Abrams, president of the Abrams Consulting Group, which advises car rental companies. “Rates are below what they were, but are still relatively high on a comparative basis.”

According to the group’s weekly survey of rental prices, the average rate for a midsize car at 10 major airports in mid-August, for example, was $85, not including taxes or fees, compared with $93 at the same time last year. In 2009, the price was $103, roughly the high point for rates in the decade the survey has tracked prices charged by the major car rental brands. (The Abrams index does not include discounters like Payless.)

The reason for the recent price decline is not weak demand: Avis Budget, Dollar Thrifty and Hertz all reported positive earnings in the second quarter of 2011, in part because of increases in rental days. But with a strong market for used cars, rental companies have been making money selling their older vehicles, so they have not set prices as aggressively as they did when the recession hit.

“There’s an incentive to buy cars, maybe even more cars than you can rent at an optimum price because you know you’re going to make a lot of money at the back end,” Mr. Abrams said. “That has a muting effect on rental pricing.”

As for the effect of competition on pricing, Mr. Abrams said that even with more airports building consolidated rental car centers, discounters like Payless or Fox Rent a Car faced challenges in capturing corporate clients. “Fox isn’t in Detroit, they’re not in Boston, and they’re not in Miami or Atlanta,” he said. “If you’re a corporate customer, and you’ve got people traveling all over the place, you can’t use a supplier that can’t meet your employees’ needs.”

But business travelers renting through corporate accounts have been somewhat shielded from sticker shock by discounted rates. Ovation Corporate Travel clients, for instance, paid an average of $81 a day for a rental car in New York City in the first half of 2011 and $40 in Las Vegas. Those prices include taxes, fees and options like navigation systems.

For those who do not benefit from a corporate discount, one way to save is checking to see if the price has dropped after making a reservation, or booking through a site like AutoSlash, which does this automatically.

“Rates start out very high, and then they tend to come down as the rental day approaches,” Mr. Weinberg said. “We see rental prices fluctuating wildly.”

Article source:

Bucks: Banks Make You Work For Their Fee Lists

When it comes to comparing bank fees, shopping around isn’t as easy as it should be.

That’s the conclusion the U.S. Public Interest Research Group drew after studying whether banks are providing lists of their fees upon requests, as they’re required to do by federal law.

The PIRG study found that most banks gave prospective customers brochures with general account information. But often, the banks had to be pressed to hand over detailed lists of fees, like those for bounced checks, opening accounts and using a competitor’s ATM, which the Truth in Savings Act requires banks to provide upon request.

Of 392 banks and credit unions visited, PIRG said, just 38 percent quickly complied with the law. Compliance edged up to 55 percent after a second or third request. But almost a fourth (23 percent) failed to provide a list at all.

I was curious to see how banks in my community compared to those in PIRG’s survey, which used secret shoppers to visit bank branches and request fee information. The federal Government Accountability Office has done similar research, with similar findings.

So this week I spent a morning visiting five different bank branches in Northwest Arkansas and asked for information about checking and savings accounts.

I didn’t say I was a reporter; I said I was thinking of switching banks and wanted to get information about their accounts, including any fees.

The results of my little survey? You can get detailed fee information, but you’ll probably have to sit through a sales pitch first. And don’t count on getting the goods the first time you ask; you may have to fuss a little, as they say in these parts.

None of the banks, as far as I could tell, had the lists ready for the taking on a display rack as you enter the branch; you have to talk to someone first, and usually an account representative, not just a teller.

Banks in my personal survey did a bit better than those in PIRG’s, in that none refused to me give their fee schedule. Of the six branches I visited — Bank of America, Arvest, Bank of Arkansas, Regions, First Security and Bank of the Ozarks—I left just one, First Security, without a copy of the fee schedule in my hand. The young account representative was apologetic in explaining that he didn’t have any copies handy because the bank was trying to reduce paper by computerizing the information.

Unfortunately, he hadn’t been instructed where to find the digital fee schedule, he said, and his manager was with another customer and unavailable to help. He first offered to give me the information verbally and then said I could probably find it online at the bank’s Web site.

But when I said I wanted a list to take with me, he agreed to e-mail it to me later, if I didn’t want to wait. Sure enough, within an hour, the information was in my inbox. A quick look at the Web site, however, turned up no similar document online. I asked First Security for comment, but had not heard back from them by post time.

At the Bank of Arkansas, the teller first suggested the information was on a brochure she gave me. When that turned out to be incorrect, she checked with her manager before printing out a sheet that, upon close inspection, appeared incomplete; it didn’t appear to list a fee for a bounced check.

Arvest gave me its fee schedule after I sat down and talked with an account representative and a trainee and answered some questions, like what my average balance was likely to be if I opened an account.

At Bank of America, a teller directed me to a chair to wait for a manager, who then asked me if I had a few minutes to chat. When I said I didn’t, she went and retrieved a fat binder that included, along with glossy marketing materials, a fee disclosure pamphlet.

At Bank of the Ozarks, I was ushered to a small office where there was a fee disclosure pamphlet in a desktop holder. The representative, however, said she wasn’t sure that one was current, so she’d be happy to tell me what the fees were. When I said I preferred a list I could take with me, she printed one from her computer.

Regions Bank also printed the fees, after a short chat with a representative who walked me through their checking account options.

My experience and the PIRG report suggests that while most banks comply when nudged, they can make it easier for prospective customers to obtain their fee schedules, in person and online, so consumers can compare the real costs of doing business with a particular institution.

The documents, for example, indicate a wide range of fees for bounced checks (less than $16 for most accounts at Arvest, compared with $35 at Bank of America; a $1 fee at Bank of the Ozarks for using another bank’s ATM, compared with $2 for Regions).

PIRG’s report recommends that the new Consumer Financial Protection Bureau extend the Truth In Savings requirements to the Internet and that banks be required to list fees in a searchable format to make them easier to find.

What has your experience been? Have you found it easy to compare fees among banks?

Article source: