The Future of Antitrust

Good morning and happy Friday.

In 2018, the Onion took a jab at Infowars with a classic headline: "The Onion Purchases Infowars in Massive Deal to Rebrand as America's Most Trusted News Source."

On Thursday, the satiric news publication, freshly revived under new ownership this year, announced that it is actually, as in no joke, buying the conspiracy theory-peddling website created by Alex Jones. It picked the property up in a bankruptcy auction. In a roundabout way, Jones is helping pay for the acquisition himself. After repeatedly calling the 2012 Sandy Hook school shooting a hoax, he was sued by the victims' families and ordered to pay over $1 billion in damages. The Onion's acquisition, still pending approval from a bankruptcy judge, was backed by several of the victims' families. "Our clients knew that true accountability meant an end to Infowars and an end to Jones' ability to spread lies, pain and fear at scale," an attorney for some of the families said Thursday.

Meta CEO Mark Zuckerberg, adopting the moniker "Z-Pain," serenaded his wife earlier this week by releasing a cover of the bawdy, foul-mouthed Atlanta rap classic "Get Low," originally performed by Lil Jon & The East Side Boyz.

Cringe does not fall under the purview of regulators. Instead, European authorities fined Meta this week for allegedly breaching antitrust rules by favoring its classified service Facebook Marketplace, while the US FTC won the right to take the company to trial over its acquisitions of Instagram and WhatsApp. Both clashes reveal more than meets the eye.

Drama and Decorum

The EU and the US are playing regulatory musical chairs. In Brussels, former EU Commissioner for Internal Market Thierry Breton resigned in September in a shock move after a dramatic standoff with Ursula von der Leyen, the European Commission's president he accused of trying to block his appointment for personal reasons.

Across the Atlantic, President-elect Donald Trump is poised to fill out agencies with appointees to suit his administration's plans. In both cases, there appears to be some alignment on tech overreach:

• The Breton-less EU fined Zuckerberg's social media giant €797.7 million euros ($843.3 million) Wednesday, charging other online marketplaces are harmed by the fact that Facebook Marketplace is automatically attached to Meta's flagship social network, putting it in front of users "whether they want it or not." Meta said it will appeal.
• The EU decision came a day after a judge allowed the Federal Trade Commission to proceed with a lawsuit to break up Meta. One could be forgiven for assuming the case started with the Biden administration's aggressive FTC Chair Lina Khan, but it actually originated in Trump's first term.

While she is almost certain not to continue in her role, Khan has a fan in Vice President-elect JD Vance, who praised her for taking on tech behemoths. Bloom Strategic Counsel lobbyist Seth Bloom told TheWrap that Trump "is a populist, and particularly when it comes to Big Tech, he's willing to engage in antitrust enforcement."

Following Through: The FTC and four states sued to block UnitedHealth Group's $3.3 billion deal to acquire home care company Amedisys. Former antitrust official David Balto told The New York Times the Trump administration will likely continue the "mainstream antitrust case."

Written by Sean Craig

That means food production must double to meet demand.

The same old food production techniques — like ground-based machinery and scattershot aerial tools — simply cannot keep up anymore. 

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Explore becoming a shareholder of Hylio today.*

Has Bob Iger now done it? Has he restored the magic, the thing defeated activist agitator Carl Icahn said was missing?

Maybe. In its fourth-quarter earnings call on Thursday, Disney reported a nine-figure profit in its direct-to-consumer streaming division — a wish upon a star that's now finally come true. That powered a 6% share price boost, but can DTC truly offset declines throughout the rest of the Magic Kingdom?

A Whole New World?

Disney's streaming division — comprising Disney+, Hulu, ESPN+, as well as various international versions — cruised to its second-straight quarter of profitability, pulling an operating income of $321 million, up from a $387 million loss a year ago. That's an unmitigated win for Disney, and a fulfillment of promises made last year to reach profitability by the end of 2024. 

Still, the global demand share of Disney's original streaming content has declined in six straight quarters, according to industry research firm Parrot Analytics. Meanwhile, Disney still trails Netflix and Amazon in non-North American markets, where it hasn't invested as heavily in local language content. That makes Disney, even in success, something of a runner-up. "No one is concerned about Disney+'s longterm viability as a standalone service, but Disney won't be happy to place third or fourth among the streamers that survive long term," Parrot Analytics wrote in a note Thursday. One helpful factor moving forward: more than half of new US Disney+ subscribers opted for the cheaper ad-supported tier, largely seen as more lucrative for streaming platforms.

And, of course, there's still the albatross of its linear TV business and the murky future of its parks business:

• Disney's linear TV unit saw a modest 6% decline in revenue, to $2.46 billion, but a massive 38% dip in profit, to $498 million.
• Meanwhile, revenue in its parks and experiences division grew just 1%, to $8.24 billion, as CFO Hugh Johnston warned of inflation-wary consumers pulling back on vacation spending. In October, Disney raised the prices of most ticket tiers to Disneyland; the company said last year it is investing $60 billion across its parks in the next decade.

Coming Soon: "There were some people who wanted to say that Iger brought the magic back," Cowen & Company analyst Doug Creutz told The New York Times. "Well, let's hold on a minute. There has actually not been a whole lot to get people excited." Disney tried for excitement anyway, announcing guidance for 2025, 2026, and 2027 — an ultra-rare move for the company, and projecting a future past Iger's planned 2026 retirement date. Unless, of course, he changes his mind again.

Written by Brian Boyle

Snacking conglomerates all agree: Petcare M&A is the cat's pajamas.

General Mills, the packaged food conglomerate behind such brands as Cheerios, Cocoa Puffs, and Bugles, announced on Thursday that it has agreed to buy the North American business of Whitebridge Pet Brands. This is General Mills' fifth petcare acquisition in six years, and shows how packaged food giants are delving ever-deeper into the petcare industry.

A Dog's Dinner

General Mills isn't the only snackmonger to sink its teeth into petcare. Mars has an enormous petcare business, as does Nestlé. The packaged food industry has been on an M&A tear in a quest to diversify and offset downward trends in snack-food sales, which have been particularly hard-hit by inflation-sensitive consumers.

Petcare, despite its recession-resistant reputation, has shown some hints of weakness this year:

• Retail trade publication The Grocer reported the volume of pet food sales has fallen roughly 4.5% over the past 12 months. Jack Walker, co-founder of pet food brand Scrumbles, told The Grocer that is because pet adoptions are subsiding post-pandemic.
• Although overall volume is down, branded petfood's overall revenue is up 1.7%, and according to Morgan Stanley, there is a generational shift towards spending more on your pets.  

Dr. Mouse M.D.: Food conglomerates aren't alone in chasing after petcare consolidation. Last week, private equity groups Silver Lake and Shore Capital Partners banded together to form an $8.6 billion vet care group, the Financial Times reported. When all those lockdown puppies and kittens start developing arthritis and cataracts, the dollars will come rolling in.

Written by Isobel Asher Hamilton