Donald Trump famously hates the so-called “fake news” media (don’t get him started on CNN). But it can be really good for media stocks. That’s because Lina Khan, the head of the Federal Trade Commission, is likely to leave as soon as Trump takes office or shortly thereafter.
Whoever replaces him will be far more favorable to allowing large mergers, and there is no place with more pent-up demand for consolidation than the big media.
The FTC as it is known is a consumer protection agency that has the power to bring antitrust cases against companies that overcharge the American public. Khan took that tenure to new and dangerous levels.
When President Biden nominated her in 2021, she was best known as the author of an academic paper, “Amazon’s Antitrust Paradox,” which predicted gloom and doom — people will pay more for things they order online, businesses small will disappear and be replaced by the Jeff Bezos Website. That is, unless the online retailer shatters into a million pieces.
As head of the FTC, she didn’t break up Amazon, which didn’t destroy mom-and-pop businesses or raise prices to astronomical levels, but she destroyed billions of dollars in deals because she believes big companies are essentially bad.
What she failed to understand is that small companies that can’t compete are bad and usually go out of business or wipe out billions of dollars in shareholder value.
That’s what happened in major media when the market sought consolidation due to changes in how Americans view news on their phones versus their televisions.
Big media became very small under Khan’s watch. Just look at a stock chart for WBD, fire sales for Paramount at a boutique studio.
With a new, looser FTC chief, you could argue that WBD stock is pretty cheap as Zas cuts debt and squeezes CNN. It’s up for sale – along with almost every other media company out there.
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Image Source : nypost.com