Hollywood Agents (Oligopoly Watch)
If you caught last night’s episode of Entourage, then you already know the lesson here. The world of Hollywood agencies is a tight oligopoly, with little inclination to see a new competitor. It’s actually, what’s dubbed an “ologonomy”, since the firms are both an oligopoly (they sell talent to the studios) and oligopsonies (they control who becomes a talent, who gets in their doors). And it’s only consolidating as ICM, one of the big five, has bought slightly smaller rival Broder Webb Chervin Silbermann Agency. The other big ones, including Endeavor, William Morris, Creative Artists Agency, and United Talent Agency may also look to pursue M&A. So with such a tightly controlled business, and what you can assume are some pretty fat profit margins, you can understand how disturbed they’d be at the emergence of an Ari Gold talent agency, or, as it were, a Miller/Gold agency. And, reminder, we already referenced Entourage at the top and that’s a picture of actor Jeremy Piven, so we’re not falling into any Joe Kernan trap here.
Official Union Set Up in China at Wal-Mart (NYT)
First it was Maryland, then Chicago, then perhaps Boston, now China is the latest place to regulate to seek labor concessions from Wal-Mart. The country demands that the All-China Federation of Trade Unions be allowed to set up branches within Wal-Mart, representing employees. And unlike Maryland, there’s probably no court that Wal-Mart can turn to to get the order over ruled on the grounds of constitutionality. That being said, the All-China Federation of Trade Unions might not be very hostile to the company; it has a reputation for siding with management on issues, particularly since the state-backed union is eager to attract foreign capital. For its part, Wal-Mart hopes to have a “cordial and productive relationship” with it.
A Revitalized US Airways Is Creating a Merger Buzz (NYT)
The overall market remains on shaky ground, but some of the big winners this year are companies we might have left for dead in 2005. GM’s the biggest, but US Airways is another company exhibiting a surprising reversal of fortune. The company’s shares have surged since it merged with America West and it earned a substantial, genuine profit in its most recent earnings report, which came out last week. The company is now the second most profitable airline, after Southwest. This of course will only fuel the calls for consolidation in the space, though these calls have been around for a while. Still, despite the seductiveness of this idea, it’s hard to pull off airline M&A. See, airlines don’t mix well for a number of reasons. For one thing, at the labor level, pilot seniority means everything. Where you stand on the list determines your flights, pay, vacations, etc. When you mix two lists of pilots, things get icky. Then there’s the fleets, which if they’re much different can create new waves of headaches. And of course, you’d like to find an airline with complementary locations, so not every potential partner is really viable. So despite the calls and demands from Wall St., which would love to advise on some of these deals, we’ll remain leery that much will happen.

Stocks headed for early pullback (CNNMoney)
It’s hard to wake up on a Monday morning, but the day holds its own allure for followers of financial markets, as we eagerly scan the headlines to see what big deals were closed over the weekend. Lately, we’ve seen several ‘Merger Mondays’, but this morning seems awfully quiet on this front, which is disappointing. Most people will wonder why they didn’t hit snooze one more time. In turn, there’s probably not going to be a merger-driven rally today. There may be a rally, but not one fueled by an otherwise suspect deal. And if you believe the crystal ball readers, there won’t be any rally today, due to tensions in the Mid-East, which despite the fact that they were escalated all of last week, somehow couldn’t permeate US markets. And there’s a lot of economic data on tap for this week too, which may only confirm that we’re headed to, er, a soft landing.

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