Ownership

Discovery Communications has struck a $14.6 billion deal to buy Scripps Networks, in the latest sign of consolidation in the cable TV industry. The combined group will have a wide-ranging roster of US cable channels, including Animal Planet, TLC and the Discovery Channel, owned by Discovery, and the Food Network and HGTV, owned by Scripps. Together they will have nearly 20 per cent of ad-supported pay-TV viewership in the US. The offer of $90 per share represents a 34 percent premium to Scripps’ unaffected share price as of July 18, and the companies said in a statement that they expect the deal to close by early 2018.

Software made by foreign companies to help Chinese users skirt the country’s system of internet filters has vanished from Apple’s app store on the mainland. One company, ExpressVPN, posted a letter it received from Apple saying that its app had been taken down “because it includes content that is illegal in China.” Another posted a message on its official account that its app had been removed. A search showed that some of the most popular foreign virtual-private networks, also known as VPNs, which give users access to the unfiltered internet in China, were no longer accessible on Apple’s app store there. ExpressVPN wrote that the removal was “surprising and unfortunate.” It added, “We’re disappointed in this development, as it represents the most drastic measure the Chinese government has taken to block the use of VPNs to date, and we are troubled to see Apple aiding China’s censorship efforts.”

Earlier this year, the Yale Law Journal had published a 24,000-word “note” by Lina Khan titled “Amazon’s Antitrust Paradox.” The article laid out with remarkable clarity and sophistication why American antitrust law has evolved to the point that it is no longer equipped to deal with tech giants such as Amazon, which has made itself as essential to commerce in the 21st century as the railroads, telephone systems and computer hardware makers had been in the 20th.

It’s not just Amazon, however, that animates concerns about competition and market power, and Khan is not the only one who is worrying. The same issues lie behind the European Union’s recent $2.7 billion fine against Google for favoring its own services in the search results it presents to its users. They are also at the heart of the long-running battle in the telecom industry over net neutrality, and the ability of cable companies and Internet service providers to give favorable treatment to their own content. They are implicated in complaints that Facebook has aided the rise of “fake news” while draining readers and revenue from legitimate news media. They even emerge in debates over the corrupting role of corporate money in politics, the decline in entrepreneurship, the slowdown in corporate investment and the rise of income inequality.

LinkedIn may very well succeed in its effort to stop a San Francisco (CA) startup from using the data of its members. But the Sunnyvale (CA) company, now a division of Microsoft, has certainly lost the moral high ground. In fact, the job-hunting and networking site is guilty of blatant hypocrisy. HiQ Labs makes software that analyzes data from public LinkedIn profiles to help employers determine which workers are likely to leave or stay. But at a hearing at U.S. District Court in San Francisco, lawyers representing LinkedIn argued that HiQ was causing significant harm to its business because members expected LinkedIn to protect their privacy. LinkedIn’s most valuable currency is “trust with customers,” said Donald Verrilli, a partner with Munger, Tolles & Olson law firm in Washington. That sounds very noble. But the very idea of a social media giant serving as the champion of privacy rights seems suspect. When a service tells you it’s free, that means it’s making money another way. And more likely than not, you’re the product.

[Commentary] Microsoft recently made a Very Serious Announcement about deploying unused television airwaves to solve the digital divide in America. News outlets ate it up. Here's what's really going on: Microsoft is aiming to be the soup-to-nuts provider of Internet of Things devices, software, and consulting services to zillions of local and national governments around the world.

Microsoft doesn't want to have to rely on existing mobile data carriers to execute those plans. Why? Because the carriers will want a pound of flesh—a percentage—in exchange for shipping data generated by Microsoft devices from Point A to Point B. These costs can become very substantial over zillions of devices in zillions of cities. The carriers have power because, in many places, they are the only ones allowed to use airwave frequencies—spectrum—under licenses from local governments for which they have paid hundreds of millions of dollars. To eliminate that bottleneck, it will be good to have
unlicensed spectrum available everywhere, and cheap chipsets and devices available that can opportunistically take advantage of that spectrum.

[Susan Crawford is the John A. Reilly Clinical Professor of Law at Harvard Law School.]

New legislation introduced by Reps David Price (D-NC) and Jared Huffman (D-CA) would protect local television markets across the country from corporate consolidation by permanently ending the so-called “UHF discount,” an obsolete Federal Communications Commission loophole that the Trump Administration wants to revive to benefit right-wing media conglomerates.

If the UHF discount is allowed to go into effect, a series of pending corporate mergers, including one with the Sinclair Broadcast Group and Tribune Media, would dramatically reduce competition among local TV stations across the country. Specifically, the Local and Independent Television Protection Act:
Requires the FCC to act within 90 days to permanently end the UHF discount; and
Grandfathers any stations owned prior to September 26, 2013, which is commensurate with the FCC’s previous efforts to end the UHF discount.
The legislation is cosponsored by Reps. Anna G. Eshoo (D-CA), Raúl Grijalva (D-AZ), Ro Khanna (D-CA), Jerry McNerney (D-CA), Jamie Raskin (D-MD), Jan Schakowsky (D-IL), and Jackie Speier (D-CA).

Apparently, tech companies like Facebook and Google that have become essential elements of 21st-century life should be regulated as utilities, top White House adviser Steve Bannon has argued. Bannon’s push for treating essential tech platforms as utilities pre-dates the Democratic “Better Deal” that was released this week. “Better Deal,” the branding for Democrats’ political objectives, included planks aimed at breaking up monopolies in a variety of sectors, suggesting that anti-monopoly politics is on the rise on both the right and left.

Bannon’s basic argument, as he has outlined it to people who’ve spoken with him, is that Facebook and Google have become effectively a necessity in contemporary life. Indeed, there may be something about an online social network or a search engine that lends itself to becoming a natural monopoly, much like a cable company, a water and sewer system, or a railroad.

In 1992, 98 percent of American homes relied on cable to watch subscription TV. There were no satellite TV options or telco-provided TV options. There certainly weren’t internet streaming options because, among other reasons, broadband wouldn’t be launched for another four years. It would be a full decade after that before a video streaming service would be made available. 25 years later, the TV marketplace is undeniably different. Technologies like cloud DVRs, apps, and TV Everywhere have transformed the way we watch television. Many of the best content creators are choosing TV to tell their stories. But perhaps most noticeably, the marketplace has become robustly competitive.

According to the FCC, 99 percent of U.S. homes have access to at least three multi-channel subscription TV services. Cable’s historic dominance has dissipated into a market where 54 percent of homes with multichannel video services are cable video customers, 34 percent are satellite video customers, and 12 percent are telco TV customers. Not so coincidentally, as fast broadband networks have become ubiquitous throughout America, additional pay TV competition has emerged from new players who use the internet to deliver programming. The dominant player is Netflix, a premium streaming service that has become an entertainment powerhouse. It has 50.9 million U.S. subscribers, more than the entire cable industry. The next largest video service provider, AT&T/DirecTV has less than half that, 25 million. And Comcast, the largest cable video provider has 22.5 million customers.

Not that long ago, the clunky cable box looked like it was on its way out. The federal government was pressuring cable companies to open up their near-monopoly on boxes to more competition, and industry leader Comcast promised apps that could render some boxes obsolete. That was then. Today, the vast majority of customers still need to rent a box to get full service from cable providers, and those box-replacing apps remain elusive.

Here's what happened. In 2015, tech companies and consumer advocates were pushing the Federal Communications Commission to open up the cable-box market. The goal was to let you buy a cable box the way you'd pick up a new smartphone, sparing you the expense of leasing them from cable companies for about $6 and up a month. The cable industry and Hollywood hated the FCC's February 2016 plan to "unlock the box." They pointed out that TV-watching apps were already available - more on that below - and laid out an industry proposal for new apps that could replace cable boxes. Amid industry pushback, the FCC's proposed rules languished ahead of the 2016 election. Afterward, President Donald Trump's new FCC chairman, Ajit Pai, shelved them permanently. The industry is no longer pushing its app proposal with the FCC, said Brian Dietz, a spokesman for the cable lobby group NCTA. And he noted that some cable and satellite companies have launched apps that let customers watch video without a cable box.

Free Basics, Facebook’s free, limited internet service for developing markets, is neither serving local needs nor achieving its objective of bringing people online for the first time. That’s according to research by citizen media and activist group Global Voices which examined the Free Basics service in six different markets – Colombia, Ghana, Kenya, Mexico, Pakistan and Philippines – to see whether it was serving the intended audience. Free Basics is a Facebook-developed mobile app that gives users access to a small selection of data-light websites and services. The websites are stripped of photos and videos and can be browsed without paying for mobile data. The Global Voices report identifies a number of weaknesses in the service, including not adequately serving the linguistic needs of local populations; featuring a glut of third-party services from private companies in the US; harvesting huge amounts of metadata about users and violating the principles of net neutrality.