Should Vice Corp. Be Allowed to Buy ComcastWarner and DirecT&T?

Media Guy Has Seen the Future and ... It's Complicated

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May 26, 2017 -- Merger mania has continued at a rapid clip over the past few years in the wake of the 2014 union of Comcast and Time Warner Cable and AT&T's takeover of DirecTV. But now, Vice Corp. -- itself born of a merger, in 2015, of News Corp. and Vice Media -- has its eyes on the biggest deal yet with a blockbuster plan to swallow both ComcastWarner and DirecT&T in one simultaneous transaction.

Vice Corp. has already been on a shopping spree, having recently snatched up Hulu, the Hot Topic retail chain, a number of newspaper companies including Canada's Globe and Mail and South Korea's Chosun Ilbo, as well as Beats Electronics -- which it picked up in a fire sale for $180 million, a fraction of the $3 billion price Apple paid for it in 2014.

Credit: Kelsey Dake for Ad Age

Though Vice Corp.'s Co-Supreme Leaders Shane Smith and Rupert Murdoch were unavailable for comment, a company spokesman did agree to answer some written questions about the unprecedented deal.

Q. Back in 2014, as Comcast was in the process of acquiring Time Warner Cable, an American Consumer Satisfaction Index survey released by the University of Michigan's Ross School of Business pointed to them as being, respectively, the No. 2 and No. 1 lowest-rated companies tracked across all sectors. AT&T and DirecTV customers were a little happier, but both of those companies also saw year-over-year declines in their ratings. Though the ACSI ratings were discontinued in 2015 shortly after the Ross School was renamed the Brian L. Roberts School of Business to honor its new benefactor, anecdotally speaking it doesn't seem like things have gotten much better. How are consumers supposed to benefit from the union of these four formerly separate pipeline giants under the single Vice Corp. umbrella?

A. ComcastWarner and DirecT&T have each been investing billions in next-generation technologies, to create better services for millions of consumers. By combining forces under Vice Corp., consumers can expect better services that are at least twice as better.

Q. Over the years, data released by the FCC Media Bureau, which tracks cable rates, shows that the average cable bill has gone up $2-$3 annually, which means that average American households pay roughly triple what they paid in 1995, the first year the FCC started keeping track. The end result is cable bills that have risen many times the average rate of inflation. The price of broadband access, which is often bundled with cable or telecom bills, has also been rising rapidly. Won't Vice Corp.'s plans worsen the situation for consumers?

A. Vice Corp. is a highly diversified company, with reach far beyond the cable-TV and ISP sectors. By strategically maximizing revenue in our various non-cable/ISP sectors, which have a broader impact on the average rate of inflation, we believe that cable and broadband rate increases -- which are necessary to bring state-of-the-art, next-generation services to consumers -- will no longer outpace the average rate of inflation.

Q. Shane Smith, who was the CEO and co-founder of Vice Media before its merger with News Corp., recently served as best man at Rupert Murdoch's marriage to Hyon Song Wol, the ex-girlfriend of Kim Jong-Un. That has Murdoch watchers questioning the state of Rupert's sometimes-rocky relationship with his son Lachlan, who for many years appeared to be his father's heir apparent. What role will Lachlan have, if any, in Vice Corp.'s new cable/broadband divisions?

A. Lachlan played a key role in bringing Vice Media and News Corp. together, and was also involved in Vice Corp.'s decision to acquire ComcastWarner and DirecT&T. Shane and Rupert will continue to rely on Lachlan's strategic vision going forward. Additionally, Shane is pleased to announce that Lachlan will serve as general manager of Vice Corp.'s Hot Topic division.

Q. What are the chances that the FCC or other governmental bodies will stand in the way of Vice Corp.'s ambitions? After all, FCC Chairman Alex Detrick is a former Vice executive.

A. Chairman Detrick only wants what's best for consumers.

Simon Dumenco is the "Media Guy" columnist for Advertising Age. You can follow him on Twitter @simondumenco.

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