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Corporate Consolidation: Last Week Tonight with John Oliver (HBO) - YouTube
Channel: unknown
[3]
I would like to talk to you
about business.
[5]
The thing that everyone
on<i> Shark Tank</i>
[7]
<i> thinks they have
a great idea for,</i>
[9]
<i> even this guy.</i>
[10]
Our cakes...
are made of foam,
[13]
and they're rentals.
[15]
-Wait!
-(AUDIENCE LAUGHING)
[16]
So, I can neither have my cake,
nor eat it too?
[20]
I am in,
here is a million dollars.
[22]
(AUDIENCE LAUGHING)
[24]
Small start-up businesses
like that
[25]
hold a special place
in America's heart
[27]
and politicians from across
the political spectrum
[29]
love to talk
about how important they are.
[32]
Small business is the backbone
of the American economy.
[35]
Small businesses
are the backbone
[37]
of this nation's economy.
[39]
BOTH: Small businesses are
the backbone of our economy.
[41]
BOTH: Small businesses are
the backbone--
[43]
ALL: Small businesses are
the backbone of our economy.
[45]
ALL: Small businesses are
the backbone of our economy.
[47]
ALL: Small businesses are
the backbone of our economy.
[50]
-(AUDIENCE APPLAUDING)
-It's true.
[51]
"Small businesses are
the backbone of our economy"
[54]
is that rare thing that
every politician agrees on.
[57]
It's that,
support the troops,
[59]
-Ted Cruz can go fuck himself...
-(AUDIENCE LAUGHING)
[61]
...and South Dakota senator
John Thune can get it,
[64]
-he can get it!
-(AUDIENCE LAUGHING)
[67]
Now, look, it can feel like
we're in a golden age
[69]
of small business start-ups, but
that isn't actually the case.
[72]
The rate at which new businesses
are been created
[73]
has actually being
steadily falling
[75]
since the 1970s.
And I would argue that
[77]
one of the reasons for that,
is that big businesses,
[80]
have been getting even bigger,
[81]
which brings us
to our main topic tonight,
[83]
"Corporate Consolidation."
[85]
Recent years, have seen
[86]
record highs
for mergers and acquisitions.
[89]
As you would know,
if you've ever watched
[90]
the thrilled reactions they get
on business news.
[93]
M&A has been hot,
continues to be hot.
[97]
An exciting year for M&A.
[99]
A few blockbuster deals
being announced.
[101]
They call it "Merger Monday,"
on Wall Street.
[103]
It is shaping up to be another
"Merger Monday."
[106]
They don't call it
"Merger Monday" for nothing.
[108]
-Media mega "Merger Monday."
-"Merger Monday."
[110]
M-- M-- M...
[111]
"Merger Monday"?
[112]
-At last we have one, I say...<i>
-♪ Hallelujah ♪</i>
[117]
Okay, that was obviously
a little nauseating, but also,
[121]
pressing a button on TV
is a little bit dangerous
[124]
because someone could take
that footage
[126]
and then loop any sound
that they want under there.
[128]
Now, obviously I'm not immature
enough to do that
[131]
but if I were
it would look like this.
[134]
"Merger Monday"?
[136]
At last we have one,
and I say...
[139]
(FART NOISE)
[141]
-(AUDIENCE APPLAUDING, CHEERING)
-(BLOWS)
[147]
The point is--
[148]
This point is, all this
merger activity
[151]
has all made some sectors
of our economy
[153]
ridiculously consolidated.
[156]
NEWSCASTER:<i> The United States
has gone from having</i>
[157]
<i>ten large airlines back in 2000
to just four today.</i>
[161]
<i> And those four mega airlines
now dominate</i>
[164]
<i> more than 80 percent
of the U.S. market.</i>
[167]
Yeah, we down to just four
major airline choices,
[170]
and no that does not include
jetBlue because that
[172]
is not actually an airline.
[174]
It's just a very expensive way
to eat those weird blue chips...
[177]
-(AUDIENCE LAUGHING)
-...which are, and this is true
[179]
-just sliced Grover arms.
-(AUDIENCE LAUGHING)
[181]
Look, and airlines here are
just the beginning.
[184]
The rental car business
[185]
is now 90 percent dominated
by just three companies.
[188]
The U.S. beer industry
is 70 percent controlled
by just two companies,
[192]
and online search engines are
of course as we all know
[195]
dominated by one major player.
That's right say it with me,
[199]
-Bing.
-(AUDIENCE LAUGHING)
[200]
That's right. Bing, the best way
to Google something.
[205]
In fact, look,
full disclosure here.
[207]
Even our own parent company,
Time Warner
[209]
is currently trying to merge
with AT&T,
[211]
which makes this story
a little dangerous for us to do.
[215]
Although you know,
that is presuming
[217]
that AT&T executives manage
to get there shitty service
[220]
working long enough to see it.
[221]
-(AUDIENCE CHEERING)
-AT&T,
[223]
it's the top
telecom company around
[226]
alphabetically and nothing else.
[228]
-(AUDIENCE APPLAUDING)
-Look, even some brands,
[231]
that you might think
of as indie
[233]
now have multinational owners.
Burt's Bees?
[235]
It's-- it's not run
by a backward bee fucker
[238]
-called Burt.
-(AUDIENCE LAUGHING)
[239]
It's run by Clorox.
[241]
Tom's of Maine,
the deodorant
[243]
which did so little to deodorize
your freshmen year roommate.
[246]
(AUDIENCE LAUGHING)
[247]
That's not owned
by Colgate-Palmolive.
[249]
And then there was Goose Island.
[251]
Now, their ads feature
beardy brewers rubbing
[254]
<i> -hops on their faces.</i>
-(AUDIENCE LAUGHING)
[255]
But what they don't mention
[257]
is that Goose Island
is owned by Anheuser-Busch,
[260]
and that farm that you just saw
[261]
is located at
822 Budweiser Loop.
[265]
It's presumably just passed
Bud Light lime-a-rita boulevard.
[269]
Basically, if you see the mass
grave of Clydesdale horses,
[272]
turn left and you're there.
[273]
-(AUDIENCE LAUGHING)
-And it says something
[275]
about the rapid rate of mergers
that even Jim Cramer,
[278]
occasionally
finds himself in disbelief
[280]
at one happening.
[282]
Watch him react to a mega merger
in the aluminum can industry.
[285]
Ball Corp's acquisition of Rexam
[288]
is taking the number
of competitors
[290]
in this space down to,
get this,
[291]
-from three to two.
-(AUDIENCE LAUGHING)
[296]
How did they let that happen?
[298]
-(AUDIENCE LAUGHING)
-Yeah.
[299]
It's not great when
a business casual Louis C.K.
[303]
with a sound effects board
[304]
is saying, "Holy shit
this was a really bad idea."
[308]
-(AUDIENCE LAUGHING)
-But,
[309]
but
"how did they let that happen?"
[310]
Is actually
a really good question.
[312]
And the answer is interesting,
because we've had
[315]
anti-trust laws on the books
for more than a century.
[317]
And I'm not saying that
every single merger is bad.
[321]
Sometimes businesses
getting bigger can lead
[323]
to greater efficiencies
and improvements.
[325]
The tension is between
allowing that
[327]
and preventing them
from doing real harm.
[330]
So it's a-- it's a balance.
[331]
But since the late 1970s,
that balance
[334]
has tipped decidedly in favor
of being merger friendly,
[337]
which has led
to real problems.
[339]
And let's start
with the obvious,
[340]
for workers, mergers can
often mean big layoffs,
[343]
but it's not just employees
that can suffer,
[346]
consumers can too,
as Jim Cramer explained,
[348]
in that aluminum can segment
[350]
in an inexplicably
sarcastic tone of voice.
[353]
I always say competition,
while great for you, a consumer,
[357]
is it enough amount of profits.
[359]
Sometimes a business would be
a total monopoly
[361]
with no competition whatsoever,
and while that's the ideal,
[364]
it's very rare to see
a genuine monopoly,
[366]
-because of course,
it's against the law.
-(AUDIENCE LAUGHING)
[368]
Which brings us to the next
best thing, an oligopoly,
[371]
where a handful of companies
control an entire industry,
[374]
co-existing peacefully
[375]
without much in the way
of price competition.
[378]
-That's a weird tone to use...
-(AUDIENCE LAUGHING)
[380]
...to describe something
that's clearly awful.
[383]
It's rare to see genuine
bestiality because of course
it's against the law.
[387]
Which brings us to the next
best thing,
[389]
having sex
with the stuffed animal
[391]
while looking at pictures
of a real horse.
[394]
(AUDIENCE LAUGHING)
[395]
And-- And for sense of what
it can look like
[398]
when a handful of companies
co-exist peacefully
[401]
without much in the way
of price competition,
[403]
just look at airlines.
[404]
In 2012, one airline executive
told an industry conference,
[408]
Consolidation has allowed us
to do things like
[410]
ancillary revenues,
which is jargon
[412]
for all those fees
that drive you fucking crazy!
[415]
Now, American was the first
major airline
[417]
to charge you for your
first checked bag back in 2008,
[420]
and back then people
could not believe it.
[423]
NEWSCASTER:<i> American Airlines
will soon charge $15</i>
[426]
<i> for the first checked bag.</i>
[428]
<i> That on top of a fee
of $25</i>
[430]
<i> -for your second one.</i>
-Fifteen dollars? Holy cow.
[434]
I'll have to put
my underwear in my pocket.
[436]
(AUDIENCE LAUGHING)
[439]
Yes!
[440]
First, that is clearly
a delightful man.
[444]
Although, it does makes you
wonder whether he
[446]
fills his bags full of underwear
and nothing else.
[449]
-(AUDIENCE LAUGHING)
-But-- But within months,
[451]
most major airlines had followed
American's lead
[453]
and it was essentially
industry standard.
[455]
And it is easy
for that to happen
[457]
when there's only a handful
of big players.
[459]
In fact since then they have
added and increased bag fees
[462]
multiple times,
often moving in tandem,
[465]
which is how those fees have
gone generating around
[467]
540 million dollars a year
a decade ago,
[470]
to 4.2 billion dollars now.
[473]
And that is infuriating.
After all,
[475]
if I wanted exorbitant fees
[477]
that keep getting raised all
the time despite shitty service,
[479]
I'd become a customer of AT&T.
[482]
-(AUDIENCE LAUGHING)
-Yeah.
[483]
-Fuck you AT&T!
-(AUDIENCE LAUGHING)
[485]
Even if you take over
you'll never be my real dad!
[488]
(AUDIENCE LAUGHING)
[490]
And, look, you-- you may
well be angry
[493]
with the service you get
from airlines
[495]
but thanks to consolidation,
[497]
they don't really need
to give a shit
[499]
about what you think.
[500]
And if you don't believe me?
[501]
Remember that awful video that
went around earlier this year.
[505]
NEWSCASTER:<i> The shocking images
of a passenger</i>
[508]
<i> caught in a travel nightmare.</i>
[510]
<i> A man visibly shaken
as he's yanked</i>
[513]
<i>and then dragged of a United jet
by law enforcement.</i>
[516]
<i> All after refusing
to give up his seat.</i>
[519]
Yeah,
that's the most horrifying thing
[521]
you can possibly see
on an airplane,
[523]
unless your in-flight movie
is<i> The Boss Baby.</i>
[526]
A movie that combines
the unbearable smugness
[529]
of Alec Baldwin
with an unbearable smugness
[531]
-of a baby.
-(AUDIENCE LAUGHING)
[532]
Now, in the wake
of that incident,
[534]
people said
it was a PR nightmare
[536]
and there was talk on Twitter
of boycotting United.
[539]
The problem is on certain routes
they're the only option.
[543]
So, a boycott is gonna be
pretty hard to pull-off,
[545]
and that is arguably why
their CEO
[548]
was later able to open his
earnings call for that quarter,
[551]
by describing a period in which,
I will remind you,
[553]
a passenger had his teeth
knocked out
[556]
on one of United's planes,
like this.
[559]
OSCAR MUNOZ:<i> Welcome to
a terrific second quarter,
strong financial</i>
[563]
<i> results and even uh,
more incredible</i>
[567]
<i>operational results. And as you
think of our customers,</i>
[570]
<i>I want to thanks them for their
continued loyalty and support.</i>
[572]
<i> We continue to find new
and better ways to service them</i>
[577]
<i> and make the more comfortable
on our airline.</i>
[579]
-(AUDIENCE LAUGHING)
-And you know what?
[580]
Is it really any wonder that
their earnings stayed solid.
[583]
United, is sometimes
the only way to get
[586]
to where you are going.
[587]
Which actually explains
their new slogan,
[589]
"You wanna fuckin' roller blade
to Houston? Shut up and get in!"
[592]
(AUDIENCE LAUGHING)
[593]
And when and industry gets
too consolidated,
[596]
any company trying to compete
with them
[599]
or survive in their
supply chain, can get crushed.
[602]
Now we all know about Amazon,
Walmart or Google,
[606]
but there are less
obvious examples of this too.
[608]
Take eye-wear. Now if you go
into a Lens Crafters,
[611]
you'll see frames
by brands like um,
[613]
Prada, Dolce & Gabbana, Burberry
and Ralph Lauren.
[616]
All of which it turns out,
[617]
are made by an Italian company
called Luxotica,
[620]
which incidentally also owns
Lens Crafters and Sunglass Hut
[625]
and Pearle Vision and runs
Target Optical,
[628]
and Sears Optical. So, what can
happen when a smaller company
[631]
goes up against them?
Well, just ask Oakley.
[635]
BRETT ARENDS:<i>
Oakley was a big competitor</i>
[636]
and they had a fight
with Luxotica
[639]
and Luxotica basically said,
[641]
we're dropping you
from our stores.
[643]
-And--
-They refused
[644]
-to sell their glasses...
-BRETT: Yeah.
[645]
-...in their store?
-It was a dispute about pricing,
[647]
and they dropped Oakley
from the stores.
[649]
And Oakley's
stock price collapsed.
[651]
There were some issues between
the two companies
[653]
in the beginning
of the 2000s, but...
[656]
both of them understood
that it was better to go along.
[660]
We merged with Oakley in 2007.
[663]
-You bought Oakley.
-So we're talking--
[665]
They tried to compete
and they lost
[667]
and then you bought them.
[669]
I understand your theory, but...
[671]
they understood that life
was better together.
[675]
-Whoa!
-(AUDIENCE LAUGHING)
[676]
That is the menacing tone
of a Bond villain,
[679]
They understood that life was
[680]
better together, Mr. Bond, no?
[684]
That is the first time
[685]
that I've ever felt sorry
for Oakley.
[688]
The official sunglasses
of guys who
[690]
un-ironically use
the term "finger blasting."
[693]
And-- I think
it's a sponsorship deal.
[695]
And-- And there is one
more victim of consolidation
[697]
that you may not think about,
[698]
and that
is the products themselves.
[701]
Because
heavily consolidated industries
[703]
can lose the incentive
to innovate
[704]
and the best example of this
may be the cable box
[708]
beneath your TV.
If you have one of those,
[710]
you probably hate it.
[712]
Because it's huge, it's glitchy,
[714]
and it's may be one
of the largest energy
[716]
consuming items in your house
[717]
even when it's turned off.
But if you think about it,
[720]
cable companies have no real
incentive to improve them.
[723]
They're essentially regional--
regional monopolies.
[725]
And again, they know
[727]
that you basically
have no where else to go.
[729]
And you can't even smash your
cable box out of frustration,
[732]
because you're renting it
and they'll then charge you
[735]
hundreds of dollars
if you don't give it back.
[737]
Which is why
we went through the trouble
[739]
of blowing this one up for you.
Please take a look.
[741]
There you go.
[743]
Pretty cathartic to watch,
right?
[744]
-I hope that helps.
-(AUDIENCE APPLAUDING)
[746]
Feel free to watch it again
in slow motion.
[752]
(AUDIENCE APPLAUDING, CHEERING)
[765]
I want you to know
that box suffered.
[768]
-(AUDIENCE LAUGHING)
-The point here is,
[771]
we seem to have forgotten,
how important Anti-Trust is.
[774]
And now are being forced
to live with the consequences.
[777]
Because this issue affects
almost everything you do.
[780]
Angry at banks?
[782]
Well, the industry's dominated
by just these four.
[785]
Frustrated with your
health insurance provider?
[786]
Odds are, it's one of these.
[788]
And if this whole story
is infuriating you so much
[791]
that you're yearning
for the sweet escape of death?
[794]
Well bad luck,
because the casket industry
[796]
is controlled
by these three companies.
[799]
Oh, and it gets even worse.
[800]
The after life is actually
controlled by one religion.
[803]
I'm not saying which one,
[804]
but when you find out
you're gonna be so mad.
[808]
(AUDIENCE LAUGHING)
[809]
-The point-- The point is--
-(AUDIENCE LAUGHING)
[812]
The point is, we have laws
[814]
to prevent the worse effects
of consolidation.
[817]
And it may well be time
to more aggressively use them
[820]
to impose strict standards
and to empower the FTC
[823]
and the DOJ's
anti-trust divisions.
[825]
And that is something that
most people
[827]
would really get behind,
[828]
and nearly
every politician should.
[830]
After all, there is one thing
they can not stop saying.
[834]
ALL: Small businesses are
the backbone of our economy.
[837]
Well, if they
really believe that,
[839]
it may be time for them
to stop talking about backbones
[842]
and actually fucking grow one.
[844]
-(AUDIENCE APPLAUDING)
-And now this.
[847]
NARRATOR:<i> And now.</i>
[848]
<i> All of Jim Cramer's
sound buttons</i>
[850]
<i> replaced with fart noises.</i>
[853]
Hedge-Funds that are in trouble
start selling,
[855]
not because they want to,
[856]
-but because they have
to raise money...
-(FART NOISE)
[858]
to pay back their
unhappy clients.
[861]
(FART NOISE)
[862]
-Things keep working out.
-(FART NOISE)
[866]
Is it any wonder
that Norfolk Southern
[868]
-and Union Pacific keep running?
-(FART NOISE)
[871]
-Buy high and then sell low!
-(FART NOISE)
[877]
A time-honored way
to lose money.
[879]
-Sell it tomorrow...
-(FART NOISE)
[882]
...because the whole idea
of saving for retirement
[885]
-puts you to sleep.
-(FART NOISE)
[886]
-I want you to feel embolden...
-(FART NOISE)
[889]
-...not.
-(FART NOISE)
[891]
As we tell you what we would do
before we pull any trigger.
[895]
(FART NOISE)
[896]
-I was wrong on both counts.
-(FART NOISE)
[901]
(FART NOISE)
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