Trade news outlets covering entertainment and media are reporting as of April 19, 2024 that John Malone formally announced his resignation as Director Emeritus at Charter Communications. Malone has played a role at Charter for years while also being the owner of Liberty Media, serving on its board and serving on the board of Warner Brothers Discovery (WBD).
Malone made the decision after seeing two fellow industry veterans resign similar positions from WBD's board after they received inquiries from the Department of Justice involving concerns over competition and potential anti-trust issues as addressed in the Clayton Act of 1914. If your business history is a bit fuzzy, the Clayton Act served as Part II after the Sherman Antitrust Act of 1890 which set out the first restrictions on monopolistic behaviors used in railroads and oil whereby individual companies arranged cartels to limit competition and rig prices.
Companies responded to the Sherman Act by simply merging into larger companies rather than acting as cartels. Voilia! Problem solved. The Clayton Act established additional bans on behaviors that became dominant after Sherman including price discrimination, exclusive dealing or tying and interlocking directories.
That last item involving interlocking directories seems to be the driver for this news. Even with fewer, larger companies, regulators in 1914 realized firms were appointing shared members as Directors of boards across companies that were competing to still share strategy and encourage price fixing behavior between supposed competitors. Terms of the Clayton Act were updated in the 1970s but conceptually, nothing has really changed in the law. What has changed is that regulators have simply ignored the facts in front of them.
As technology and telecommunication firms have become more inter-dependent and profitable, the number of personnel acting as board members on multiple firms has gone up considerably. In many cases, many of these board memberships seem to be granted to convey gravitas and viability to smaller firms. "Hey, you must have a good opportunity there if you have John Malone on your board..." One can argue that having some wise older veterans around to guide firms competing in industries where a lack of standards (video standards, data network standards, make up your own example) could reduce efficiencies and trigger later financial losses can provide benefits to the industry itself and consumers.
In the larger picture, however, the operation of these giant firms and their regulation should not be defaulting to an assumption of innocence first, then only followed up with anti-trust enforcement when harm is identified. The very existance of the Sherman Anti-Trust Act and the Clayton Act reflects DECADES of learning that any time the practices outlawed by these acts are used, they NEVER benefit the economy or the public in the long term and they should always be stopped in their tracks. If recent examples are needed, look at the failures of large firms to protect private data of customers, the insane pricing of subscription TV and Internet service or the MASSIVE violation of intellectual property rights reflected in the launch of Artificial Intelligence systems trained on terabytes of publicly available but copyrighted content.
And look how little effort it takes by the government to trigger altered behavior. Just sending a notice inviting someone in for a chat is enough for three industry kingpins to abandon positions on boards.
WTH
