Saturday, February 22, 2014

Time Warner and Whatsapp

Two big acquisitions in the past week caught my attention. Time Warner Cable for $45 billion and Whatsapp for $19 billion. What's striking is not the difference but how similar these numbers were. Those who fret about the cable monopolies and their excess profits, should acknowledge that the market expects to make about as much money from a company that sells a 99 cent iphone app that could be written by a high school student, as from owning a cable monopoly. Suggesting that costs are high in the cable market and that the threat of entry is high as well.

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