Acquisitions as a Response to Deregulation: Evidence from the Cable Television Industry

This paper studies the dynamics of an industry that is subject to exclusive geographical licensing. I develop a model of license ownership that predicts the evolution of profit-maximizing entry and acquisition decisions by firms over time, starting from an initial allocation of licenses. The entry and acquisition process is modeled as a one-sided coalition-formation game as in Farrell and Scotchmer (1988), where acquisition payoffs depend on economies of scale and agglomeration (economies of density). I estimate the model for the cable television industry in Canada using a panel that I have constructed from 1990 to 1996. The dataset builds up from the national regulator's license ownership decision files, and contains license-level information on acquisition decisions, subscribership, and subscription profits. The model is estimated in two steps. I first estimate firms' license-level profit functions, and then estimate the parameters of the fixed, merger and entry cost functions by Simulated Maximum Likelihood. Through counterfactual simulations, I use the estimated model to quantify the extent to which economies of scale and density drive acquisition behaviour, and to evaluate how merger activity reacts to a partial deregulation that occurs in 1994. Counterfactual experiments are also used to evaluate policies that stimulate entry or reduce acquisitions in the early years of the sample. The main finding is that these policies can lead to more productive dominant firms in the long-run as the industry consolidates.Acquisition, Entry, Coalition Formation, Economies of Density, Economies of Scale, Simulated Maximum Likelihood, Cable Television

Consolidation and Price Discrimination in the Cable Television Industry

This paper measures the impact of consolidation on cable television prices, product quality,profits and consumer welfare. I estimate a multi-product monopoly model using panel data on cable menus and costs in Canada from 1990 to 1996. Using counterfactual simulations, I find mean consumer welfare rises with acquisitions, as does welfare inequality across consumers. Scale economies are the primary driver of consolidation effects quantitatively, with firm heterogeneity in demand and costs having a smaller impact. Regional consolidation yields non-negligible welfare gains, particularly in rural markets where potential cable quality improvements and cost reductions are the largest.Consolidation; Price Discrimination; Economies of Scale; Firm Heterogeneity;

Equity research - The Walt Disney Company

Mestrado em FinançasEste Relatório de Equity Research foi escrito como Trabalho Final de Mestrado em Finanças e segue o formato recomendado pelo CFA Institute. A escolha da The Walt Disney Company para este trabalho deveu-se a vários motivos: a longa e interessante história da empresa que, com pontos altos e baixos, é uma oportunidade de aprendizagem com o seu estudo; o seu negócio dividido em vários segmentos que, apesar de terem diferenças significativas, são altamente sinergéticos e, em alguns casos, estão mudar o paradigma da indústria do entretenimento; mais importantemente, sabiamos à partida que a empresa tinha passado por uma reestruturação e que se encontrava num processo de aquisição. A segunda e terceira razões elevaram o desafio significativamente, o que, na nossa opinião, seria apropriado para um verdadeiro Trabalho Final de Mestrado. Naturalmente, a pandemia COVID-19 desafiou-nos adicionalmente e, como tal, foi considerada neste projecto. Para avaliar a Disney, utilizámos um modelo DCF, bem como um DDM e uma anállise de múltiplos. Chegámos a um price target de USD 144.11, implicando um upside de 26.00% face ao preço de USD 114.37 a 19 de Maio de 2020 e levando a uma recomendação de Buy.This Equity Research Report was written as a MSc in Finance's Final Work and follows the format recommended by the CFA Institute. The Walt Disney Company was chosen for this Final Work for several reasons: firstly, it is a company with a long and interesting history, with its ups and downs, which provides a learning opportunity while studying it; secondly, its business is across several segments which despite showing significant differences are highly synergetic and in some cases changing the entertainment business paradigm; thirdly and most importantly, we knew beforehand that the Company had gone through a business restructuring and was in the middle of an acquisition process. The second and third reasons increased the challenge considerably, which in our opinion was fitting for a proper Master's Final Work. Naturally, the COVID-19 pandemic increased the challenge even further and as such, was accounted for in this project. To value Disney, we employed a DCF Model as well as a DDM and multiples analysis. A price target of USD 144.11 was reached, implying a 26.00% upside potential from our reference price of USD 114.37 on May 19, 2020, and a Buy recommendation.info:eu-repo/semantics/publishedVersio

Essays in Industrial Organization

My research analyzes the impact that new technology can have on consumers' welfare and the strategic responses from firms. My dissertation focuses on the television industry, which has experienced dramatic changes within the last decade with improvements in technology and the introduction of streaming video services. The entry of streaming video services is important to study because this new product has had a disruptive effect on the economic environment for the television industry, including direct and indirect effects on consumer welfare. In chapter one, I explore the implications of the direct effect of streaming video services on consumer product choice and consumer welfare. To quantify the benefits from streaming video services, I build a model for the demand of television services in the United States. The model uses the multiple-discrete choice framework, which allows for consumers to choose a traditional package, a streaming video service, or a combination of these services. To estimate the model, I construct a new market-level dataset with prices, product characteristics, and observed demand for 2014 and 2015. I then conduct three counterfactual simulations to measure the change in consumer welfare when a product is removed from the choice set. The simulation results suggest that removing the streaming service has around three times as large of an effect on consumer welfare as compared to removing a satellite provider. Then, in chapter two I explore the indirect effects that the entry of streaming services had on consumer welfare through cable television package prices. In particular, I examine the strategic response to this new product for the cable package prices. I quantify this effect by expanding upon the methodology from chapter one to include a supply-side Bertrand-Nash equilibrium with differentiated products. Then, I use GMM to estimate the cost parameters for cable providers. After these parameters are estimated, I run a counterfactual simulation that removes the streaming service from the consumer's choice sets and re-evaluates the equilibrium prices for cable providers. I find that the entry of streaming services may have led to a $15 increase in cable prices per month, and the median consumer welfare effect is$6.26 per month, which means that as of 2014 and 2015 the median household would be willing to pay $6.26 per month to avoid the higher cable prices from the entry of Netflix. Finally, changes in the economic environment from the entry of a new product will have implications for competition. Therefore, streaming services should be considered when analyzing antitrust cases, new policies, and regulations. In the third chapter, I use the models and data from chapters one and two to examine a proposed horizontal merger between the top two cable providers in the era of streaming services to understand the impact that this merger would have on consumer welfare. The counterfactual simulation in this chapter quantifies the consumer welfare effect from the proposed merger between Comcast and Time Warner Cable. I find that the median consumer welfare effect is$4.01 per month, which means that as of 2014 and 2015 the median household would be willing to pay $4.01 per month to avoid the higher cable prices from the merger of Comcast and Time Warner Cable. Therefore, the antitrust authorities were justifiably concerned about this proposed merger.PHDEconomicsUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/162859/1/conlonkm_1.pd

Cable regulation in the internet era

The market for multi-channel video programming has undergone considerable change in the last 15 years. Direct-Broadcast Satellite service, spurred by 1999 legislation that leveled the playing field with cable television systems, has grown from 3% to 33% of the U.S. MVPD (cable, satellite, and telco video) market. Telephone operators have entered in some parts of the US and online video distributors are a growing source of television viewing. This chapter considers the merits of cable television regulation in light of these developments. It surveys the dismal empirical record on the effects of price regulation in cable and the more encouraging but incomplete evidence on the benefits of satellite and telco competition. It concludes with a consideration of four open issues in cable markets: horizontal concentration and vertical integration in the programming market, bundling by both cable systems and programmers, online video distribution, and temporary programming blackouts from failed carriage negotiations for both broadcast and cable programming. While the distribution market is clearly now more competitive, concerns in each of these areas remain

Issues Related to the Emergence of the Information Superhighway and California Societal Changes, IISTPS Report 96-4

The Norman Y. Mineta International Institute for Surface Transportation Policy Studies (IISTPS) at San José State University (SJSU) conducted this project to review the continuing development of the Internet and the Information Superhighway. Emphasis was placed on an examination of the impact on commuting and working patterns in California, and an analysis of how public transportation agencies, including Caltrans, might take advantage of the new communications technologies. The document reviews the technology underlying the current Internet “structure” and examines anticipated developments. It is important to note that much of the research for this limited-scope project was conducted during 1995, and the topic is so rapidly evolving that some information is almost automatically “dated.” The report also examines how transportation agencies are basically similar in structure and function to other business entities, and how they can continue to utilize the emerging technologies to improve internal and external communications. As part of a detailed discussion of specific transportation agency functions, it is noted that the concept of a “Roundtable Forum,” growing out of developments in Concurrent Engineering, can provide an opportunity for representatives from multiple jurisdictions to utilize the Internet for more coordinated decision-making. The report also included an extensive analysis of demographic trends in California in recent years, such as commute and recreational activities, and identifies how the emerging technologies may impact future changes

Competitive Effects of Partial Ownership: Financial Interest and Corporate Control

In this article, we set up an economic framework for analyzing the competitive effects of partial ownership interests. We have three main goals. First, we conceptually derive and explain the competitive effects of partial ownership, explaining its key elements and drawing analogies to the key ideas behind the analysis of horizontal mergers. Second, we present a general framework for evaluating the competitive effects of partial ownership that is analogous to, but at the same time recognizes key differences in the standard analysis for evaluating horizontal mergers. Third, we examine several methods of quantifying these competitive effects

Bulletin of Information 1992-1993

Annual bulletin with academic calendar, school objectives & course of studies, faculty, administration, degrees conferred, course descriptions, fees & tuition, financial assistance, admission requirements, academic regulations, examinations & grades, student organizations, Alumni Association, nondiscrimination & affirmative action policieshttps://ir.lawnet.fordham.edu/bulletins/1086/thumbnail.jp