Word: mergerer
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...your mega-merger, and raise you... Acquisitiveness in the airline industry was bound to take off in the jetwash of the proposed United-US Airways merger, but a report that honchos at No. 2 American Airlines and No. 4 Northwest have been in contact about a deal of their own - which would create a new top dog mega-carrier with nearly 30 percent market share - smells suspiciously like a bluff. "Obviously, there's a fever in the industry to consolidate for fear of getting left behind by United," says TIME business writer John Greenwald. "But it seems like the government...
...everyone is worried. Some analysts have theorized that the AT&T-MediaOne merger might actually be good for competition, because tentacles of the resultant giant would work their way into communities previously dependent on one cable or Internet provider, challenging the status quo and presumably forcing prices down. There is also the growing realization that cable lines will not be the only broadband entryway to people's homes forever: Advances in satellite technology and improvements in phone lines will no doubt mean increased competition at this crucial part of the information-delivery chain...
...fuzzy. According to TIME financial correspondent Bernard Baumohl, although there are certain immutable red flags that signal monopoly power, the Justice Department and FCC each have their own way of doing things, which can be trying for companies who need the go-ahead from both agencies to continue a merger or acquisition. "While the DOJ maintains long-standing, black-and-white parameters to seek out monopolies, the FCC tends to undertake a far more subjective and changeable analysis," says Baumohl. AT&T, take note: While it's extremely rare for the FCC to challenge DOJ findings, the possibility...
...Airways, formerly US Air, formerly a combination of Allegheny Air, Piedmont Air, Pacific Southwest and Mohawk Airlines... The new mega-carrier will boast revenues of $26.5 billion from multiple hubs on both coasts and 6,500 daily flights, nearly twice as many as its nearest competitor, American. Like any merger, it's an economy of scale - more northeastern flights feeding seamlessly into those lucrative long-distance flights means more one-stop United shopping for flyers, which means more money. Which is why United was willing to pay $60 a share - in cash, not stock - for an airline lucky...
...what will the merger do to the price of fares? The idea of a bigger, broader United having so much control over so many hubs is certain to flag antitrust regulators, as well as impelling other airlines to consider similar combinations. Such a process would, of course, lead to more and more control over the hub-and-spoke system by fewer and fewer airlines. United tried to head off those worries by putting some provisions in the deal - promising a fare freeze (except in case of upticks in inflation or gas prices, of course) for two years after the merger...