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Greed is all right, by the way I think greed is healthy. You can be greedy and still feel good about yourself.

Ivan F. Boesky

Bigger Isn't Better - Better IS Better

The point is that you can't be too greedy.
Donald Trump

Now it is all about the MONEY. Anyone who is mystified about Mergers and Acquisitions, should ask some basic questions. The most important being who is going to pay for the deal? Will the enterprise be better after the marriage? And will the marketplace, consumers, employees and society benefit from this new offspring? All too often in the last twenty years the answers have been; you pay, seldom and none of the above.

The world of finance has been transformed into the biggest casino the world has even seen. Valid methods of merging two or more companies with the intent to create a stronger and healthier business company, have been discarded for the leverage buyout that seeks to maximize values by slashing employees, moving production offshore, selling off assets, cutting costs and abandoning entire markets and functions. Those that equate wealth as equity performance and index levels see nothing askew with this modern version of the shell game. They love the ride as stock prices keep their upward march. Their response is simply, I am making money! Or are they?

Acquisitions are very different from a merger. When a corporation or a speculator makes a tender offer to the stock holders of a public company, they are offering to pay a price that is usually well above the most recent trading price of the target company. Why do they think that it is worth so much more than the collective views of the marketplace? The simple but lucid reason is that the currency they are using to make this acquisition is seen as inexpensive to us for the purchase. This currency that is used is seldom cash. A stock purchase is the favorite method to buy an established company.

Usually it is the unknown upstart and 'hot' company buying the well know name company. And as long as their own stock commands a premium trading value, the logic runs; why not buy a REAL company! It should be obvious even to the uninitiated that the interest of Wall Street is to 'do business'. Fees, commissions, service charges and every other ingenious method to charge for services rendered, are the real reason why the equity markets exist. Notions that the fundamental function of finance is to raise capital for new business ventures is as outmoded with the real way that the Corporate/State works, as the misnomer that politicians are reliable stewards of the National Trust.

The recent bid of EchoStar Communication (dish) to acquire Hughes' Communication Direc TV from parent General Motors, over the efforts of News Corp., for a reported 32 Billion offer, illustrates the absurdity. Nothing against a professional poker playing entrepreneur, but EchoStar's CEO Charlie Ergen isn't exactly in the same league as Rupert Murdoch. Whether 'Charlie Chat' needs another telecommunication partner to pull off the deal is not the point. Nor is the issue that cable subscribers need real competition from a satellite giant! No the point is whether ANY subscriber base viewer will benefit from such an acquisition?

No one has leveraged their operation more and kept the cable titans from charging the sky than 'Charlie dish'. But is anyone naive enough to think that approving only one national satellite vender will keep pricing fair over the long haul? When you are buying business with free receivers, the inevitability of insolvency is inescapable in the real world. But in the realm of high finance, it only means that you need to take on a 'Street' approved partner. The game continues; only at higher figures, on all levels.

So who will pay for all this capital of inflated stock value? Obviously, all of us are the end debtor, for we pay and pay and continue to pay even more . . . Who in their right mind would believe that our monthly costs for subscribing to the unwatchable, suffering through endless commercial messages, and allowing the perverts of our culture the privilege to enter into our homes, would cost more than our phone charges? But that is the sad record of all mass media. The very few worthwhile programming options require us to support a truly miserable system. But that's what we get when we allow government to auction off the public airwaves to the bidders of the Corporate/State axis.

This example is not an undiminished condemnation of all corporate ventures. It just goes to illustrate that the playing field is open to only those who have the green light to the money machine. Ergen will lose to News Corp, because he is the maverick that has dared to interject aggressive pricing that hampers the media giants and drains their cash cow. My sympathy to his plight, but he is placing against the 'House' and no bluff will win this hand of cards against the studs that are at this table. The game is rigged, it always has been a playing field that favors the accepted insider, and the public is the final recipient of the tab.

Don't look for solutions, they don't exist. The powerful rule the markets, make the deals that benefit the few, and most of the rest, watch with envy as they command mastery of THEIR universe. This game seldom produces a better business. The bigger a corporation becomes may delay the day of acceptability for creative bookkeeping, because the next M & A is just around the corner. Bigger has now become necessary just to survive in the world of the lowest cost producer. But what price have we all paid for the benefit of the few? Forget the sums of your portfolio, IRA's and 401K; they are real only as long as it serves the interests of the 'Street'.

But what is REAL, is a society that demands most families to have both parents in the work force. One that requires most to work for a corporation that regularly changes management and erode your employment security. And one that continually raises the percentage of your income that goes for taxes, and isolates our communities from cordial interaction with the added stress to daily life. Yes, bigger is NOT better. But who can blame anyone because they pay for that temporary relief that comes from fantasy entertainment on cable? The true price that we are paying is not in the charge for programming, but in the loss of our culture and the quality of life that our society once had . . . Remember when America prospered along side GM? Not exactly what it used to be.

SARTRE - August 13, 2001

Conducting your business in a socially responsible way is good business. It means that you can attract better employees and that customers will know what you stand for and like you for it.

M. Anthony Burns

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