STLR Link Roundup – February 25, 2014

Comcast is causing a stir

On February 13, 2014, Comcast announced that it would acquire Time Warner Cable, making the largest broadband cable provider even bigger. Despite growing concerns that the F.C.C. will pursue an antitrust claim against the proposed merger due to the creation of a monopsomy market, Comcast is acting like a market leader. Yesterday, February 24, 2014, Netflix agreed to pay Comcast for smoother streaming of its online video. (See a recent STLR blog post about the developments.) Netflix joins Google and Facebook, as both companies already pay Comcast for content-delivery network access. This agreement has created uproar over potential cost increases to customers, despite Comcast’s adamant claim that this merger will benefit the consumer.

On the same day, the Supreme Court declined to hear an appeal by the Tennis Channel from the D.C. Circuit, which unanimously ruled that Comcast did not have to include the Tennis Channel in its basic cable lineup. The Tennis Channel had argued that Comcast unfairly discriminated against it, favoring its own channels, like the Golf Channel. The dominance of Comcast will now come before the F.C.C. as it considers whether this merger passes muster. The Netflix agreement and the Tennis Channel refusal could be indicators of the power Comcast now yields, and potentially could yield as its market share grows.

Apple and Samsung fail to reach an agreement in mediation… again.

On February 24, 2014, Apple and Samsung announced that they failed to reach a settlement in their latest U.S. patent infringement lawsuit. This failed mediation leaves them headed to trial in the Northern District of California. The companies previously were forced to hold a court-imposed mediation session in May 2012 before the companies went to trial over other patents. In November 2013, a jury awarded Apple $290 million, bringing the total damages in the previous suit to $888 million, down from the initial $1.05 billion awarded by the first jury, holding that Samsung infringed its patents. The lawsuit is part of a historically expansive patent dispute, which is being fought in over 10 countries. Apple alleges that Samsung’s Galaxy products infringe its patents, while Samsung alleges that Apple’s iPod and iPhone infringe its patents.

Facebook acquired WhatsApp for $19 billion

Last week, Facebook Inc., advised by Weil Gotshal & Manges LLP, acquired WhatsApp, Inc., advised by Fenwick & West LLP, for $19 billion ($12 billion in stock, $4 billion in cash and $3 billion in restricted shares). The deal marks the largest Internet acquisition in more than a decade. WhatsApp is a cross-platform messaging application that enables a user to message another user without having to pay for SMS, by allowing users to communicate using the same internet data plan for email and web browsing, which means users can even communicate internationally without having to pay exorbitant fees when traveling.

Less than a week later, WhatsApp co-founder and chief executive officer announced that the mobile messaging service will begin to offer voice calling as early as April, bringing free phone calls to users who already enjoy free text messaging on the application. This recent acquisitions shows how much money phone carriers are losing out to WhatsApp and its competitors, and has many searching for the next WhatsApp, one week after the company’s acquisition was splattered across the news.  Was it worth $19 billion?

Athletes’ copyright and antitrust case against the NCAA headed to trial

On February 21, 2014, U.S. District Judge Claudia Wilken ruled that a case in which former football and basketball players filed a claim against the NCAA seeking a share of $800 million a year in licensing fees for televised games must go to trial in June. The NCAA does not pay its athletes. Many current and former athletes are seeking to secure compensation and control over their image and likeness. Currently, the NCAA and its member institutions make enormous profits from college athletics and control the copyright over the players’ likeness.  The case originated when former UCLA college basketball player Ed O’Bannon filed a claim against Electronic Arts and the Collegiate Licensing Company along with the NCAA for selling his and other players’ likeness in video games. In November, the plaintiffs settled the claims with EA and CLC for $40 million.

 

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