OK, so here's something that few will notice and few will care about. The Wall Street Journal reported yesterday that Comcast is in talks to buy DreamWorks Animation for three billion dollars. To get some idea of the magnitude of such numbers, written out it looks like this: 3,000,000,000 USD. If we divide it by the median annual income of Americans, let's say $50,000, that's enough for 6,000 families. It has become relatively easy to throw around numbers of 3 billion here, 7 billion there, without really being cognizant of the magnitude of those numbers. Just saying.
My point, though, is otherwise. This deal, ostensibly, as the WSJ put it, "could make the cable giant a rival to Walt Disney Co. in the lucrative family-entertainment business." The word "rival," of course, points to what we would like to believe about capitalism in general -- that the competition for revenue is essentially a democratic process more or less equivalent to voting with one's pocket book. When I buy a ticket to a Disney movie, or a DreamWorks movie, or both, I am essentially giving them a thumbs up vote. With enough thumbs up votes, one has an enterprise worth 3 billion dollars.
The competition between DreamWorks and Walt Disney, however, more or less misses the point. As we all know, Comcast Corporation isn't just a "family entertainment" provider, but is, rather, an American multinational mass media company. It is the largest broadcasting and largest cable company in the world by revenue, and it owns NBC and Telemundo as well as Universal Pictures. All of which makes an acquisition of DreamWorks essentially a "portfolio" acquisition and they are making such an acquisition, not so much to compete with Disney, but to absorb another asset that might potentially compete against them as content providers.
Having said that, Comcast is both content and access providers, and as access providers they have been broadly criticized for monopolistic tendencies. As anyone who has sought cable or internet service for their home knows, there is very limited competition among providers. Their sheer size gives them considerable leverage when it comes to "paid peering" agreements (a full discussion is a post unto itself) which impacts directly on the quality of one's internet connections. In short, without meaningful competition in most markets across the US, it is not surprising that their customer service and customer satisfaction are notoriously bad, nor is it surprising that the Consumerist called them the "worst company in America" both in 2010 and 2014.
In short, for many Americans, Comcast controls a good portion of what one sees and how one sees it. Even so, one might feel a bit of sympathy for Kerry Kratzenberg, the CEO of DreamWorks, insofar as he might well be out of a job soon -- might feel some sympathy were it not for the 21.9 million settlement "payout" he would receive should the acquisition take place and he would still control 60% of the common voting stock of the company. With a 5% return on 21.9 million held in "savings," he could have an annual income of 1,095,000 USD and do nothing else ever. Although it would take some sacrifice, I'm sure, most Americans could live on that return. Just saying.
Also, let's, for a moment, consider what that 60% of the common voting stock means, just generally speaking. It has been said that shareholders, as such, represent another democratic aspect of corporate life -- that CEOs and the company generally are "beholden" to the shareholders in much the same way that politicians are "beholden" to the individual voter. That might be true, sorta, if the shares were widely distributed, but someone who own 60% of the shares is by definition already a "majority of one," though I'm pretty sure that's not what Thoreau had in mind when he encouraged individual American's to be a "majority of one." If Mr. Kratzenberg is "beholden" to shareholders, he is "beholden" mostly to himself.
Here's the kicker. As the WSJ reports,
Some of DreamWorks Animation's challenges have come from nimbler new competitors such as Illumination, which rather than building a large studio infrastructure such as Dream Works, produces its movies with foreign animators at significantly lower cost.
That has led investors to pressure DreamWorks to lower its costs of production, which typically range between $130 million and $145 million, compared with about $80 million for Illumination.
So, ultimately, making an animated movie and making a Trump tie are ultimately no different. They both can be "off-shored" to reduce labor and production costs, which in turn increases profits and returns to shareholders. Ask yourself, however, just who are these "investors" who are putting "pressure" on DreamWorks to "lower its costs of production" by using cheaper foreign labor? Am I mistaken in assuming that 60% of those "investors" are Mr Kratzenberg himself, the CEO of DreamWorks? It seems that Mr. Kratzenberg is mostly "pressuring" himself, and doing so at the expense, again, of domestic jobs. Should Comcast acquire DreamWorks, the "necessary changes" would, no doubt, be easier to effectuate and it won't put much of a crimp in Mr. Kratzenberg's style.
Please understand me. I don't think this is a "conspiracy" against American workers, per se. It is rather just the way international capitalism works. The "global" workers employed by Illumination, I'm sure, enjoyed a boost in their standard of living, and taking a global perspective, global capitalism has improved the standard of living in many second and third world nations. From that perspective, it's not all bad, but having said that, it has done so at the expense of American workers. It has indirectly "redistributed" wealth from the American worker to those same "global" workers. The phrase I heard too many times, that "education" will make Americans more "competitive" in the global labor market is horse hockey. The only thing that will make Americans more "competitive" in the global labor market would be to "lower the cost of production" -- that is to take less in pay and benefits for the same or greater levels of productivity. If there is a new American Dream among the international capitalists, we would look more and more like India today with an over-supply of very cheap labor -- and indeed and the disparity between those with and those without grows, as all but "service sector" jobs slowly disappear, we are looking more and more like India every day.
When I say that the likes of Mr. Roberts and Burke of Comcast, Mr. Kratzenberg of DreamWorks, or Mr. Meledandri of Illumination are "international capitalists," however, I am asserting that they are ultimately less and less concerned with any "national" impact of their actions, more concerned with their own benefit, which, yes, is tied to the "profitability" of their multi-national enterprises. In some very broad sense, considered globally, they are indeed the so-called "makers." The search for greater and greater "profitability," however, enriches a few considerably, but does nothing to maximize domestic employment and does nothing maximize American pay and benefits. Quite the contrary, it has led to considerable pressure to "lower the costs of production," labor being one of the most significant "costs of production," and the "internationalization" begun with Reagan, perpetuated by Bush, Clinton, another Bush, and Obama through various trade agreements, has allowed American corporations greater and greater latitude to change, well, their longitude and latitude. I don't know that we can put that cash cow back in the barn, but it bears thinking about.
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