Corporate Consolidation: Last Week Tonight with John Oliver (HBO)

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I would like to talk to you about business. The thing that everyone on<i> Shark Tank</i> <i> thinks they have a great idea for,</i> <i> even this guy.</i> Our cakes... are made of foam, and they're rentals. -Wait! -(AUDIENCE LAUGHING) So, I can neither have my cake, nor eat it too? I am in, here is a million dollars. (AUDIENCE LAUGHING) Small start-up businesses like that hold a special place in America's heart and politicians from across the political spectrum love to talk about how important they are. Small business is the backbone of the American economy. Small businesses are the backbone of this nation's economy. BOTH: Small businesses are the backbone of our economy. BOTH: Small businesses are the backbone-- ALL: Small businesses are the backbone of our economy. ALL: Small businesses are the backbone of our economy. ALL: Small businesses are the backbone of our economy. -(AUDIENCE APPLAUDING) -It's true. "Small businesses are the backbone of our economy" is that rare thing that every politician agrees on. It's that, support the troops, -Ted Cruz can go fuck himself... -(AUDIENCE LAUGHING) ...and South Dakota senator John Thune can get it, -he can get it! -(AUDIENCE LAUGHING) Now, look, it can feel like we're in a golden age of small business start-ups, but that isn't actually the case. The rate at which new businesses are been created has actually being steadily falling since the 1970s. And I would argue that one of the reasons for that, is that big businesses, have been getting even bigger, which brings us to our main topic tonight, "Corporate Consolidation." Recent years, have seen record highs for mergers and acquisitions. As you would know, if you've ever watched the thrilled reactions they get on business news. M&A has been hot, continues to be hot. An exciting year for M&A. A few blockbuster deals being announced. They call it "Merger Monday," on Wall Street. It is shaping up to be another "Merger Monday." They don't call it "Merger Monday" for nothing. -Media mega "Merger Monday." -"Merger Monday." M-- M-- M... "Merger Monday"? -At last we have one, I say...<i> -β™ͺ Hallelujah β™ͺ</i> Okay, that was obviously a little nauseating, but also, pressing a button on TV is a little bit dangerous because someone could take that footage and then loop any sound that they want under there. Now, obviously I'm not immature enough to do that but if I were it would look like this. "Merger Monday"? At last we have one, and I say... (FART NOISE) -(AUDIENCE APPLAUDING, CHEERING) -(BLOWS) The point is-- This point is, all this merger activity has all made some sectors of our economy ridiculously consolidated. NEWSCASTER:<i> The United States has gone from having</i> <i>ten large airlines back in 2000 to just four today.</i> <i> And those four mega airlines now dominate</i> <i> more than 80 percent of the U.S. market.</i> Yeah, we down to just four major airline choices, and no that does not include jetBlue because that is not actually an airline. It's just a very expensive way to eat those weird blue chips... -(AUDIENCE LAUGHING) -...which are, and this is true -just sliced Grover arms. -(AUDIENCE LAUGHING) Look, and airlines here are just the beginning. The rental car business is now 90 percent dominated by just three companies. The U.S. beer industry is 70 percent controlled by just two companies, and online search engines are of course as we all know dominated by one major player. That's right say it with me, -Bing. -(AUDIENCE LAUGHING) That's right. Bing, the best way to Google something. In fact, look, full disclosure here. Even our own parent company, Time Warner is currently trying to merge with AT&T, which makes this story a little dangerous for us to do. Although you know, that is presuming that AT&T executives manage to get there shitty service working long enough to see it. -(AUDIENCE CHEERING) -AT&T, it's the top telecom company around alphabetically and nothing else. -(AUDIENCE APPLAUDING) -Look, even some brands, that you might think of as indie now have multinational owners. Burt's Bees? It's-- it's not run by a backward bee fucker -called Burt. -(AUDIENCE LAUGHING) It's run by Clorox. Tom's of Maine, the deodorant which did so little to deodorize your freshmen year roommate. (AUDIENCE LAUGHING) That's not owned by Colgate-Palmolive. And then there was Goose Island. Now, their ads feature beardy brewers rubbing <i> -hops on their faces.</i> -(AUDIENCE LAUGHING) But what they don't mention is that Goose Island is owned by Anheuser-Busch, and that farm that you just saw is located at 822 Budweiser Loop. It's presumably just passed Bud Light lime-a-rita boulevard. Basically, if you see the mass grave of Clydesdale horses, turn left and you're there. -(AUDIENCE LAUGHING) -And it says something about the rapid rate of mergers that even Jim Cramer, occasionally finds himself in disbelief at one happening. Watch him react to a mega merger in the aluminum can industry. Ball Corp's acquisition of Rexam is taking the number of competitors in this space down to, get this, -from three to two. -(AUDIENCE LAUGHING) How did they let that happen? -(AUDIENCE LAUGHING) -Yeah. It's not great when a business casual Louis C.K. with a sound effects board is saying, "Holy shit this was a really bad idea." -(AUDIENCE LAUGHING) -But, but "how did they let that happen?" Is actually a really good question. And the answer is interesting, because we've had anti-trust laws on the books for more than a century. And I'm not saying that every single merger is bad. Sometimes businesses getting bigger can lead to greater efficiencies and improvements. The tension is between allowing that and preventing them from doing real harm. So it's a-- it's a balance. But since the late 1970s, that balance has tipped decidedly in favor of being merger friendly, which has led to real problems. And let's start with the obvious, for workers, mergers can often mean big layoffs, but it's not just employees that can suffer, consumers can too, as Jim Cramer explained, in that aluminum can segment in an inexplicably sarcastic tone of voice. I always say competition, while great for you, a consumer, is it enough amount of profits. Sometimes a business would be a total monopoly with no competition whatsoever, and while that's the ideal, it's very rare to see a genuine monopoly, -because of course, it's against the law. -(AUDIENCE LAUGHING) Which brings us to the next best thing, an oligopoly, where a handful of companies control an entire industry, co-existing peacefully without much in the way of price competition. -That's a weird tone to use... -(AUDIENCE LAUGHING) ...to describe something that's clearly awful. It's rare to see genuine bestiality because of course it's against the law. Which brings us to the next best thing, having sex with the stuffed animal while looking at pictures of a real horse. (AUDIENCE LAUGHING) And-- And for sense of what it can look like when a handful of companies co-exist peacefully without much in the way of price competition, just look at airlines. In 2012, one airline executive told an industry conference, Consolidation has allowed us to do things like ancillary revenues, which is jargon for all those fees that drive you fucking crazy! Now, American was the first major airline to charge you for your first checked bag back in 2008, and back then people could not believe it. NEWSCASTER:<i> American Airlines will soon charge $15</i> <i> for the first checked bag.</i> <i> That on top of a fee of $25</i> <i> -for your second one.</i> -Fifteen dollars? Holy cow. I'll have to put my underwear in my pocket. (AUDIENCE LAUGHING) Yes! First, that is clearly a delightful man. Although, it does makes you wonder whether he fills his bags full of underwear and nothing else. -(AUDIENCE LAUGHING) -But-- But within months, most major airlines had followed American's lead and it was essentially industry standard. And it is easy for that to happen when there's only a handful of big players. In fact since then they have added and increased bag fees multiple times, often moving in tandem, which is how those fees have gone generating around 540 million dollars a year a decade ago, to 4.2 billion dollars now. And that is infuriating. After all, if I wanted exorbitant fees that keep getting raised all the time despite shitty service, I'd become a customer of AT&T. -(AUDIENCE LAUGHING) -Yeah. -Fuck you AT&T! -(AUDIENCE LAUGHING) Even if you take over you'll never be my real dad! (AUDIENCE LAUGHING) And, look, you-- you may well be angry with the service you get from airlines but thanks to consolidation, they don't really need to give a shit about what you think. And if you don't believe me? Remember that awful video that went around earlier this year. NEWSCASTER:<i> The shocking images of a passenger</i> <i> caught in a travel nightmare.</i> <i> A man visibly shaken as he's yanked</i> <i>and then dragged of a United jet by law enforcement.</i> <i> All after refusing to give up his seat.</i> Yeah, that's the most horrifying thing you can possibly see on an airplane, unless your in-flight movie is<i> The Boss Baby.</i> A movie that combines the unbearable smugness of Alec Baldwin with an unbearable smugness -of a baby. -(AUDIENCE LAUGHING) Now, in the wake of that incident, people said it was a PR nightmare and there was talk on Twitter of boycotting United. The problem is on certain routes they're the only option. So, a boycott is gonna be pretty hard to pull-off, and that is arguably why their CEO was later able to open his earnings call for that quarter, by describing a period in which, I will remind you, a passenger had his teeth knocked out on one of United's planes, like this. OSCAR MUNOZ:<i> Welcome to a terrific second quarter, strong financial</i> <i> results and even uh, more incredible</i> <i>operational results. And as you think of our customers,</i> <i>I want to thanks them for their continued loyalty and support.</i> <i> We continue to find new and better ways to service them</i> <i> and make the more comfortable on our airline.</i> -(AUDIENCE LAUGHING) -And you know what? Is it really any wonder that their earnings stayed solid. United, is sometimes the only way to get to where you are going. Which actually explains their new slogan, "You wanna fuckin' roller blade to Houston? Shut up and get in!" (AUDIENCE LAUGHING) And when and industry gets too consolidated, any company trying to compete with them or survive in their supply chain, can get crushed. Now we all know about Amazon, Walmart or Google, but there are less obvious examples of this too. Take eye-wear. Now if you go into a Lens Crafters, you'll see frames by brands like um, Prada, Dolce & Gabbana, Burberry and Ralph Lauren. All of which it turns out, are made by an Italian company called Luxotica, which incidentally also owns Lens Crafters and Sunglass Hut and Pearle Vision and runs Target Optical, and Sears Optical. So, what can happen when a smaller company goes up against them? Well, just ask Oakley. BRETT ARENDS:<i> Oakley was a big competitor</i> and they had a fight with Luxotica and Luxotica basically said, we're dropping you from our stores. -And-- -They refused -to sell their glasses... -BRETT: Yeah. -...in their store? -It was a dispute about pricing, and they dropped Oakley from the stores. And Oakley's stock price collapsed. There were some issues between the two companies in the beginning of the 2000s, but... both of them understood that it was better to go along. We merged with Oakley in 2007. -You bought Oakley. -So we're talking-- They tried to compete and they lost and then you bought them. I understand your theory, but... they understood that life was better together. -Whoa! -(AUDIENCE LAUGHING) That is the menacing tone of a Bond villain, They understood that life was better together, Mr. Bond, no? That is the first time that I've ever felt sorry for Oakley. The official sunglasses of guys who un-ironically use the term "finger blasting." And-- I think it's a sponsorship deal. And-- And there is one more victim of consolidation that you may not think about, and that is the products themselves. Because heavily consolidated industries can lose the incentive to innovate and the best example of this may be the cable box beneath your TV. If you have one of those, you probably hate it. Because it's huge, it's glitchy, and it's may be one of the largest energy consuming items in your house even when it's turned off. But if you think about it, cable companies have no real incentive to improve them. They're essentially regional-- regional monopolies. And again, they know that you basically have no where else to go. And you can't even smash your cable box out of frustration, because you're renting it and they'll then charge you hundreds of dollars if you don't give it back. Which is why we went through the trouble of blowing this one up for you. Please take a look. There you go. Pretty cathartic to watch, right? -I hope that helps. -(AUDIENCE APPLAUDING) Feel free to watch it again in slow motion. (AUDIENCE APPLAUDING, CHEERING) I want you to know that box suffered. -(AUDIENCE LAUGHING) -The point here is, we seem to have forgotten, how important Anti-Trust is. And now are being forced to live with the consequences. Because this issue affects almost everything you do. Angry at banks? Well, the industry's dominated by just these four. Frustrated with your health insurance provider? Odds are, it's one of these. And if this whole story is infuriating you so much that you're yearning for the sweet escape of death? Well bad luck, because the casket industry is controlled by these three companies. Oh, and it gets even worse. The after life is actually controlled by one religion. I'm not saying which one, but when you find out you're gonna be so mad. (AUDIENCE LAUGHING) -The point-- The point is-- -(AUDIENCE LAUGHING) The point is, we have laws to prevent the worse effects of consolidation. And it may well be time to more aggressively use them to impose strict standards and to empower the FTC and the DOJ's anti-trust divisions. And that is something that most people would really get behind, and nearly every politician should. After all, there is one thing they can not stop saying. ALL: Small businesses are the backbone of our economy. Well, if they really believe that, it may be time for them to stop talking about backbones and actually fucking grow one. -(AUDIENCE APPLAUDING) -And now this. NARRATOR:<i> And now.</i> <i> All of Jim Cramer's sound buttons</i> <i> replaced with fart noises.</i> Hedge-Funds that are in trouble start selling, not because they want to, -but because they have to raise money... -(FART NOISE) to pay back their unhappy clients. (FART NOISE) -Things keep working out. -(FART NOISE) Is it any wonder that Norfolk Southern -and Union Pacific keep running? -(FART NOISE) -Buy high and then sell low! -(FART NOISE) A time-honored way to lose money. -Sell it tomorrow... -(FART NOISE) ...because the whole idea of saving for retirement -puts you to sleep. -(FART NOISE) -I want you to feel embolden... -(FART NOISE) -...not. -(FART NOISE) As we tell you what we would do before we pull any trigger. (FART NOISE) -I was wrong on both counts. -(FART NOISE) (FART NOISE)
Info
Channel: LastWeekTonight
Views: 8,896,449
Rating: 4.8906035 out of 5
Keywords: last week tonight corporate consolidation, mergers, john oliver corporate consolidation
Id: 00wQYmvfhn4
Channel Id: undefined
Length: 15min 10sec (910 seconds)
Published: Sun Sep 24 2017
Reddit Comments

There is something deeply unsettling about a group of elected officials sounding like the fucking borg collective.

πŸ‘οΈŽ︎ 555 πŸ‘€οΈŽ︎ u/[deleted] πŸ“…οΈŽ︎ Sep 25 2017 πŸ—«︎ replies

I was wondering while watching this. Have we reached the peak of merging or will it continue to get worse from here on out? Because if we have really reduced airlines to 4 companies, how much more merging can happen?

πŸ‘οΈŽ︎ 432 πŸ‘€οΈŽ︎ u/hmaster1332 πŸ“…οΈŽ︎ Sep 25 2017 πŸ—«︎ replies

Good that Megyn Kelly got crushed in that montage.

Small businesses are the backbone of our economy

Small businesses are the backbone of our economy

Small businesses are the backbone of our economy

Small businesses are the backbone of our economy

Small businesses are the backbone of our economy

This feels like a slogan in a cult.

Also, I am glad that he brought Luxotica, one of the worst offenders in corporate consolidation.

πŸ‘οΈŽ︎ 580 πŸ‘€οΈŽ︎ u/Sisiwakanamaru πŸ“…οΈŽ︎ Sep 25 2017 πŸ—«︎ replies

I used to work for time warner cable, it got acquired and I got laid off along with several of my colleagues. Then I worked for Virgin American, it got acquired and several of my workers got laid off, now I work for startup that is in talks to be acquired by a tech giant.

I can't be the only one, right?

πŸ‘οΈŽ︎ 44 πŸ‘€οΈŽ︎ u/olraygoza πŸ“…οΈŽ︎ Sep 25 2017 πŸ—«︎ replies

Bing, the best way to get to Google to install Google chrome

πŸ‘οΈŽ︎ 182 πŸ‘€οΈŽ︎ u/Jordaneer πŸ“…οΈŽ︎ Sep 25 2017 πŸ—«︎ replies

Fuck you AT&T!

πŸ‘οΈŽ︎ 128 πŸ‘€οΈŽ︎ u/MightyAdam πŸ“…οΈŽ︎ Sep 25 2017 πŸ—«︎ replies

To ask politicians to stop big corporations is career suicide for them because reelection campaign are not cheap....

Politicians should wear jackets like NASCAR to show their sponsors aka campaign donors

πŸ‘οΈŽ︎ 146 πŸ‘€οΈŽ︎ u/logicman219 πŸ“…οΈŽ︎ Sep 25 2017 πŸ—«︎ replies

Also, the grocery inudstry is merging like crazy, Albertsons and Safeway merged, now there are rumors about Food Lion and Giant. Kroger is snapping up southern brands as well. It’s getting out of hand because without competition, they begin to simply not care.

πŸ‘οΈŽ︎ 78 πŸ‘€οΈŽ︎ u/IslandBoy94 πŸ“…οΈŽ︎ Sep 25 2017 πŸ—«︎ replies

The Emmy + fart joke thing was great :)

πŸ‘οΈŽ︎ 24 πŸ‘€οΈŽ︎ u/mariusg πŸ“…οΈŽ︎ Sep 25 2017 πŸ—«︎ replies
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