Comparison of compliances between banking and football industry.

http://www.ftseglobalmarkets.com/issues/issue-79-november-december-2014/why-compliance-means-more-than-fair-play-for-banking.html

En Estados Unidos y Europa las fusiones pueden ser motivo de objeción por los entes reguladores en caso que se vea afectada la privacidad de los consumidores con motivo de la referida fusión. En virtud de lo cual en todas las auditorías legales se deberá empezar a considerar el análisis de las políticas de privacidad utilizadas por las target companies.

FTC merger review likely to incorporate analysis of privacy issues
 

• McDermott Will & Emery
• Carla A.R. Hine 

Source: Lexology practical knowledge

• 
  
• 
  

The Federal Trade Commission (FTC or the Commission), along with the U.S. Department of Justice, can challenge mergers it believes will result in a substantial lessening of competition – for example through higher prices, lower quality or reduced rates of innovation.  

Although the analysis of whether a transaction may be anticompetitive typically focuses on price, privacy is increasingly regarded as a kind of non-price competition, like quality or innovation.  During a recent symposium on the parameters and enforcement reach of Section 5 of the FTC Act, Deborah Feinstein, the director of the FTC’s Bureau of Competition, noted that privacy concerns are becoming more important in the agency’s merger reviews.  Specifically she stated, “Privacy could be a form of non-price competition important to customers that could be actionable if two kinds of companies competed on privacy commitments on technologies they came up with.” 

At this same symposium, Jessica Rich, director of the FTC’s Bureau of Consumer Protection, remarked on the agency’s increasing expectations that companies protect the consumer data they collect and be more transparent about what they collect, how they store and protect it, and about third parties with whom they share the data. 

The FTC’s Bureaus of Competition and Consumer Protection fulfill the agency’s dual mission to promote competition and protect consumers, in part, through the enforcement of Section 5 of the FTC Act.  With two areas of expertise and a supporting Bureau of Economics under one roof, the Commission is uniquely positioned to analyze whether a potential merger may substantially lessen privacy-related competition. 

The concept that privacy is a form of non-price competition is not new to the FTC.  In its 2007 statement upon closing its investigation into the merger of Google, Inc. and DoubleClick Inc., the Commission recognized that mergers can “adversely affect non-price attributes of competition, such as consumer privacy.”  Commissioner Pamela Jones Harbour’s dissent in the Google/DoubleClick matter outlined a number of forward-looking competition and privacy-related considerations for analyzing mergers of data-rich companies.  The FTC ultimately concluded that the evidence in that case “did not support the theories of potential competitive harm” and thus declined to challenge the deal.  The matter laid the groundwork, however, for the agency’s future consideration of these issues. 

While the FTC has yet to challenge a transaction on the basis that privacy competition would be substantially lessened, parties can expect staff from both the Bureau of Competition and the Bureau of Consumer Protection to be working closely together to analyze a proposed transaction’s impact on privacy.  The FTC’s review of mergers between entities with large databases of consumer information may focus on: (1) whether the transaction will result in decreased privacy protections,i.e., lower quality of privacy; and (2) whether the combined parties achieve market power as a result of combining their consumer data. 

This concept is not unique to the United States.  The European Commission’s 2008 decision in TomTom/Tele Atlasexamined whether there would be a decrease in privacy-based competition by investigating whether the combination of the portable navigation device manufacturers would enable a dominant player to offer less privacy protections without fearing a loss of business.  More recently, the European Data Protection Supervisor issued a preliminary opinion entitled Privacy and Competitiveness in the Age of Big Data (March 26, 2014) with the goal of initiating a dialogue between experts and practitioners on potential gaps in EU competition, consumer protection and data protection policies. 

With former and current FTC commissioners advocating for the inclusion of privacy considerations in merger investigations, Feinstein’s recent remarks, and the European Data Protection Supervisor offering similar views, companies in data-rich industries who are considering merging with or acquiring a competitor should expect privacy to play a prominent role in the antitrust review of their proposed transaction.  For proposed transactions that implicate combinations of large databases of consumer information, the parties’ chief privacy officers will likely play an unprecedented role in the antitrust defense of the transaction, and parties should expect inquiry into how the merger might affect consumer privacy post-transaction and how the data will be maintained, protected and used.  If privacy concerns are likely to arise, parties can prepare in advance as part of their overall antitrust defense.  For example: 

• Companies, through their counsel, should undertake due diligence of the target’s privacy practices, as well as its statements to consumers, including privacy policies– not only their current state, but how they have changed over time in response to competitive pressures;
• Antitrust counsel should interview personnel and review the parties’ own internal ordinary course documents to understand how each has responded in the marketplace to privacy-based competition;
• Merging companies may want to consider engaging economic consultants to assess the transaction’s potential competitive impact on privacy or consider efficiencies arguments that might help mitigate competitive concerns;
• Companies should consider in advance how the combined entity will address consumer privacy post-transaction – and whether they can preempt FTC concerns through certain commitments such as consumer opt-outs or maintaining the quality of their privacy protection
  

If you have the idea of investing some money in a theatre production you should read these recommendations from the New York Times.

Rules for investing in a Broadway production.

Se empieza a sentir en Argentina la migración de la publicidad de la TV abierta hacia otras pantallas.

Interesante reporte de Perfil sobre la publicidad en la TV abierta de Argentina.

Web 2.0 in Latin America: Why we blew it and what we can do to fix it

The bet we made

The bet we made was simple. We thought we could bring Silicon Valley to Latin America and the Silicon Valley playbook of funding companies built to need more and more capital to Latin America.

This seemed like a reasonable strategy since in LatAm over the past 100 years most of the fortunes have been made and remade using a simple formula. You build a company and sell it to international investors when your local market gets “hot”.

Whether as angel investors, accelerators or early stage VC funds, we each saw Playdom/Disney, Groupon and a couple of other multinationals acquiring early stage companies in Latin America. We assumed, we thought quite rationally, that these international companies were the first of many companies with global ambitions that would come to LatAm in search of companies to acquire.

We even “tropicalized” our expectations. In Silicon Valley the “sweet spot” for an exit is between $25-250 million. We figured that in LatAm that sweet spot for an acquisition might be more like $10-35 million, which is still pretty sweet if you are investing in early stage valuations below $2 million.

And thus the Web 2.0 revolution in Latin America started. Angel investors like me began opening up our wallets. Accelerators began springing up around the region. Government actors like Start-up Chile, City of Buenos Aires and Innpulsa (Colombia) began supporting start-ups with cash and office space. The more institutional venture capital money like Sequoia, Redpoint eVenture, Tiger Global, Kaszek Ventrues began to arrive to or to focus on Brazil, while looking for investments throughout the region. It was awesome. It was a great party.

We are waking up three or four years later with one dozy of a hangover. The early stage ecosystem in Latin America is sliding into a crisis.

Lack of exits

Simply put you cannot have an ecosystem where money keeps going in and no money is coming out. The steady stream of strategic exits needed to support the level of early stage investing simply has not happened. The reality is while big successes are great, it is the small to medium exits that are needed to encourage more and more investing.

We are seeing excellent accelerators that have invested in over 75 companies that have had one small exit. We seeing some the most active early stage investors with portfolios of 200+ companies, rethinking their early stage strategies. Some of the later stage VC funds are quietly “shifting their focus away from Latin America”. We are seeing a generation of Zombie companies.

Most discouraging for me, we are witnessing spectacular failures-for instance, I am an investor in a B2B company that recently failed having burned through its $350,000 of seed financing with exactly zero revenues and zero contracts signed. That is about as spectacular as a failure can be.

The honest reason that the exits haven’t happened is simple. We failed to build companies that are compelling enough to spark the interest of multinational companies.

In short, capitalism is working. We deserve to lose a lot of our money.

Why we went wrong: The artist vs. the baker

The reason we went wrong is that rather than focus on passion and creativity, we – the investors and the entrepreneurs alike –began to focus on the payday.

We lost sight that our goal needed to be to create great, sustainable companies that solve problems for our local consumers. Rather than focus on entrepreneurs bent on disruptive innovation, the reality is our focus has all too often been looking for a quick flip or finding an investor to fund more of company’s losses.

We forgot that a real entrepreneur is much more like an artist than a baker.

A baker gets up early in the morning, works hard, puts together the right ingredients and makes bread. Most bread is not art. A baker doesn’t need inspiration. A baker needs to put the right ingredients, together in the right way to bake his bread.

An artist is very different. An artist tries to see past how things are into how things could be. An artist is going to make his art at all costs, because he is consumed by his vision.

In Silicon Valley the whole community is interested in supporting the “artist’ and not the “baker”. We have been investing in too many bakers in Latin America. This is why our companies are not inspiring. That is why we are not seeing the exits.

Why Silicon Valley is not our answer

I admire Silicon Valley. Mainly because Silicon Valley is a whole ecosystem based on near total failure.

Before we set the goal to replicate Silicon Valley in Latin America (and start assigning cute names like “Chilicon Valley” or “Rio’s Silicon Beach”), let’s keep just two key statistics in mind. VC returns haven’t beaten the public market for most of the past decade, and the industry hasn’t as a whole had a positive year (returned the cash invested) since 1997. Not only the investors/experts aren’t showing good returns in Silicon Valley, the vast majority of the entrepreneurs that raise money there also end up failing. More than 75% of companies that raise Series A capital (generally raise over $1 million from an institutional investor) end up failing.

In the face of all this failure what makes Silicon Valley great? Why does Silicon Valley inspire us? Because the successes in Silicon Valley are tremendous. Because true innovation occurs in the Valley. And true innovation and disruption change all of our lives, much the way art changes our lives and inspires us.

It is hard to imagine that in Latin America we are going to be willing to accept a failure rate anywhere near the failure rate of Silicon Valley, particularly since we will never have the mega, tens of billions successes like Facebook, LikedIn, Twitter, Google, Microsoft to point to, and to skew the returns of some lucky (or insightful) early stage investors.

Bollywood as a model

Rather than try to replicate Silicon Valley, I suggest we try to create our ownBollywood. Bollywood, a synonym for the film industry in Mumbai (India), is a parallel film industry in India.

Bollywood is not an attempt to copy “Hollywood” in India. Bollywood is a film industry inspired by Hollywood, that takes many cues from Hollywood, but that is totally adapted to the 1+ billion Indian market. Films cost less to make (on average $1.5 million vs. $47.7 million in Hollywood). The studio system, where actors are on contract, is the norm. The films often are musicals with fanciful plots that appeal to the Indian audience, but would never appeal to a wide Western audience.

The results speak for themselves. Bollywood movies sell more 3.6 billion movie theater tickets a year. Hollywood movies sell 2.6 billion tickets a year worldwide. While Hollywood movies generate about 35 times the revenues as Bollywood movies, Bollywood is a thriving and a profitable film industry on its own terms.

In Latin America we can create our own “Bollywood” for venture capital. We need to forget about how things are done in Silicon Valley and create our own “TechnoLatino”. Our TechnoLatino should have an “air” of Silicon Valley while being uniquely Latin American.

First, the accelerators and government start up programs need to stop funding “clones”. A clone is any project whose elevators pitch begins with “We are the XXXX for Latin America” (for XXXX you can fill in whatever successful Silicon Valley company you like be it Opentable, Uber, Groupon, Twitter, Amazon, Kickstarter, whoever.

Clones that appropriately tropicalize proven tech business models and bring them to Latin America are great. Clones require great execution, rather than great inspiration. Clones require “bakers”, rather then an “artist”. Clones are best created by “company builders” – funds that specialize in the “industrial production” of companies.

There are company builders that have literally built 200+ companies who are experts in executing or cloning business models. In Latin America we are seeing the emergence of some interesting company builders. The development of “clones” is best left to those specialists (disclosure: I an an investor in a company builder that operated in Latin America).

Accelerators and other start-up programs need to focus on real innovation–focus on finding the artists. It is only real innovation that will support that big returns/valuation that will justify their efforts.

Second, we have to start creating companies that could be attractive acquisition targets for the local economic groups that dominate our economies.

Throughout Latin America there are very few truly public companies. Virtually every company is dominated or controlled by a family/economic group. Many of these groups have stood on sidelines, watching with bewilderment as money has been thrown at startups in the past few years. We need to start to realize that the best and most likely alternatives for exits of our companies are those local economic groups. We need to engage those economic actors. Our companies need to begin to solve the problems and offer solutions to those groups.

Third, the angel investors have to change the funding model. We cannot try to apply the Silicon Valley playbook for funding-which often is “spray and pray”. Angel investors like myself in the Latin America regularly supported seed capital rounds of between $250-750,000 for start-ups and near start-ups. This was really, really stupid.

We need to start offering entrepreneurs much smaller amounts of initial capital. Less is sometimes more. Less initial capital imposes disciple and promotes a lean launch. Too much money often encourages building too much infrastructure, too soon before you know your customer and what he wants. For instance I co founded a company where we raised $750,000+ in initial seed capital. We launched on day one in three countries. It has taken us two (2) years and three (3) CEOs to really learn what our customers’ needs are. We would have been better offer having much less money, starting small, while we figured out our business.

Also, have you ever seen a start-up raise $500,000 and not end up with a $30,000 a monthly burn?

An initial seed round of $100,000 should be enough for most companies. $100,000 is a lot of money–almost an unimaginable amount of money in LatAm where middle class people live on $1,000 a month. The reality is most of our tech-based companies should be able to reach breakeven with $100,000, if they have a business model that makes sense.

As part of our initial $100,000 financing, we, the angel investors, can offer a commitment to inject an additional $150,000 of more growth capital, if the company proves its business model (or modifies its business model enough times until it stumbles into the right formula).

My last suggestion is simple. Can we please stop organizing the demo days/start up tours to Silicon Valley? In Spanish we say “delirio de grandeza” (“delusions of grandeur”). While a start-up day that brings together a selection of the best companies from the whole region will attract interest, investors in Silicon Valley are not waiting to receive an email that yet another group early stage companies from any one Latin American country or city is coming to town.

If the goal of these trips is entrepre-tourism, then these trips are a great success. The Latin entrepreneurs get a perfunctory tour of Facebook’s office and to meet a recent hire from Google’s meet and greet squad. All too often on these start-up tours, Silicon Valley becomes like an Epcot for visiting entrepreneurs.

However, if the goal of these trips is to stir interest from investors, they are generally abject failures. Even in Miami, which is much more interested and connected with Latin America, demo days showcasing companies from one country or one city fail to generate much interest.

————–

When I first rode the subway in New York City by myself, my mother only gave my one piece of advice. “If you realize you are heading in the wrong direction, you need to get off that train and get on a train that is heading in the direction towards where you want to go.” It is time that we in the VC ecosystem in Latin America get on a different train and head in a different direction.

Old timers like me waited almost 10 years from the year 2000’s tech debacle for there to be a reasonable flow of venture capital activity in the LatAm region. We have a unique, once in a generation opportunity to create some incredible companies and create a sustainable tech/innovation ecosystem.

In Latin America we need to forget about trying to copy or depend on Silicon Valley. We need to create our own TechnoLatino ecosystem, inspired by Silicon Valley, but uniquely our own.

Now, would someone please pass me the “Salsa”?

The opinion of Capello in the nextweb.com

New York Times Company Sells Boston Globe

By CHRISTINE HAUGHNEY

August 3, 2013

The New York Times Company said on Saturday that it had agreed to sell The Boston Globe and its other New England media properties to John W. Henry, principal owner of the Boston Red Sox, returning the paper to local ownership after two decades in which it struggled to stem the decline in circulation and revenue.
Eileen Murphy, a Times spokeswoman, confirmed that Mr. Henry would pay $70 million for the paper. That would represent a staggering drop in value for the Globe, which The Times bought in 1993 for $1.1 billion, the highest price paid for an American newspaper. At the time, The Globe was one of the nation’s most prestigious papers in a far more robust newspaper environment. But like other newspapers, it began to lose readers and advertisers to the Internet, and revenue plummeted. The Times Company has taken several write-downs related to the New England Media Group, and in February it said it was putting The Globe and other assets in the group up for sale.
For The Globe, the planned sale restores a Boston connection that prevailed for 120 years under the Taylor family, which owned the paper from 1873 until its sale 20 years ago. While not from Boston, Mr. Henry has for the last decade been active in local sports, and his Fenway Sports Group owns the Red Sox, Fenway Park and 80 percent of the New England Sports Network. It also owns the soccer club Liverpool F.C. in the English Premier League.
“This is a thriving, dynamic region that needs a strong, sustainable Boston Globe playing an integral role in the community’s long-term future,” Mr. Henry said in a statement about the sale. “In coming days there will be announcements concerning those joining me in this community commitment and effort.”
In addition to The Globe, the sale includes BostonGlobe.com; Boston.com; The Worcester Telegram & Gazette; Telegram.com; the direct mail marketing company Globe Direct; and the company’s 49 percent interest in Metro Boston, a free daily paper. Mr. Henry is buying the media group without partners through his acquisition company; under terms of the sale, he does not have to assume The Globe’s pension liabilities.
The all-cash sale is expected to close in 30-60 days.
The Globe is not the only paper to sell for a heavily discounted price. In April 2012, Philadelphia’s newspapers sold for $55 million after selling for $515 million in 2006. In October, The Tampa Tribune sold for $9.5 million. During recent talks about the sale of the Tribune Company’s portfolio of newspapers, analysts estimated that the entire newspaper company, including The Los Angeles Times and The Chicago Tribune, was worth only $623 million.
For the Times Company, the New England Media Group was the last big asset in a portfolio it had been downsizing for several years. The acquisition of The Globe in 1993 was part of the company’s strategy to solidify its grip on the eastern corridor advertising sector and to have a presence that stretched from Maine to the District of Columbia. At the time, in addition to its flagship New York newspaper, the Times Company owned 31 regional newspapers, 20 magazines, 5 television stations, 2 radio stations and other businesses. It also had a half-interest, with the Washington Post Company, in The International Herald Tribune.
But in recent years, the Times Company has been divesting itself of its noncore assets to focus on developing its primary brand, The New York Times. In 2012, the company sold its 16 regional newspapers. Last year, it sold the About Group to IAC/InterActiveCorp for $300 million. This year, The Times announced plans to expand its global presence by changing the name of The International Herald Tribune to The International New York Times and attracting a new global audience of readers to become subscribers.
The Globe attracted a range of prospective buyers. Among those who expressed interest were Douglas F. Manchester, owner of the U-T San Diego; and a group led by Jack Griffin, the former chief executive of Time Inc., that included Ben and Steve Taylor, whose family sold The Globe to the Times Company.
This week, The Globe reported that Mr. Henry had offered to buy the paper after the sports investment group he had partnered with backed out. Mr. Henry worked with The Times over the last decade on its purchase of a stake in the Fenway Sports Group. In 2012, the Times Company sold its final stake in the group for $63 million.
Like most newspapers, The Globe has struggled to hold onto its readers and the print advertisers who fed its profits for decades. According to the Alliance for Audited Media, circulation at The Globe from Monday through Friday declined 38 percent in 2013 from 2003, to 245,572 from 402,423. Before the Times Company bought The Globe in 1993, The Globe had a weekday circulation of 506,996.
As circulation declined, so did advertising. According to the second-quarter earnings statement released by the Times Company on Thursday, advertising revenue for the New England Media Group dropped 9.5 percent, to $44.4 million, compared with the same quarter in 2012.
After the release of the company’s earnings, John Janedis, a research analyst with UBS, said it was wise for the company to sell The Globe. He estimated that the paper was worth $150 million to $175 million on a cash flow basis without factoring in pension liabilities.
“The trends at The Globe have been a drag on the company,” Mr. Janedis said. “The New York Times has performed a lot better over the past several years. To the extent that you can refocus on a paper with massive global appeal that has still a very strong core readership and then expand the product offerings, there’s probably more long-term value creation there versus having The Times and The Globe long term in the same portfolio.”
During the time that it was owned by the Times Company, The Globe won eight Pulitzer Prizes, including the 2003 public service award for its coverage of sexual abuse in the Catholic Church. Last November, The Washington Post hired away the paper’s editor of a decade, Martin Baron, who had shepherded The Globe’s coverage since shortly before the Sept. 11, 2001, attacks. In December, The Times announced that Brian McGrory, a longtime columnist and former metro editor, would succeed Mr. Baron. In the early days in his job, Mr. McGrory led The Globe’s staff through its coverage of the Boston Marathon bombing, which was picked up by news organizations around the world.
As many papers have struggled to remain relevant with younger readers who read more news online, The Globe made some strides at attracting younger audiences. Under the leadership of its publisher, Christopher M. Mayer, The Globe invited technology start-up firms to use abandoned classified advertising space in its shrinking newsroom. It also turned empty space into community spaces where bands visiting the company’s Internet station, RadioBDC, could perform. According to the latest earnings report, the number of digital subscribers grew nearly 70 percent to 39,000 in the second quarter compared with the year-earlier period.
Eric Bishop contributed reporting from New York and Gerry Mullany contributed from Hong Kong.