Canadian Mounties & DIRECTV

By: Robert F. Abbott, author of Big Macs & Our Pensions: Who Gets McDonald's Profits? the book that explains the connection between the retirement income of the middle class and the profits of big business

Thursday, February 20, 2014

Red coated Canadian Mounties are among the owners of DIRECTV, and no doubt enjoying this morning's earnings' announcement (however, they won't enjoy access to DIRECTV's satellite television services).

The Mounties are the Royal Canadian Mounted Police, and along with members of the Canadian armed forces and the Canadian federal civil service are the main participants in the Public Sector Pension Investment Board (PSP). They owned 181,689 shares of this American company at the close of trading last December 31st (according to nasdaq.com).

The company describes itself this way at its website,

"...the world's leading provider of digital television entertainment services. Through its subsidiaries and affiliated companies in the United States, Brazil, Mexico and other countries in Latin America, DIRECTV provides digital television service to 20.16 million customers in the United States and 17.22 million customers in Latin America."

In a news release, the company announced its fourth quarter and full year 2013 results. The highlights of the report included revenue growth of 6% and an increase of 8% in earnings per share (EPS).

The market liked the news; the share price increased in morning trading, up more than 3% at one point. Almost 86% of the company's shares belong to institutional investors (mostly pension funds, mutual funds, and insurance companies).

The linkages here show our perspective needs to be global when considering business and the funds that help us save for retirement. In this case, we see Canadian police officers and soldiers buying stock in an American company, which used that capital to help it expand into Latin America. In turn, those same police and soldiers will see their retirement incomes bolstered with profits DIRECTV makes in Latin America.

The Bigger Picture:

Will Profits from Big Macs Add to Your Retirement Income?

In 1948, the McDonald brothers redesigned and remodelled their drive-in restaurant in San Bernardino, California. Taking inspiration from Henry Ford's assembly-line, they created the fast food revolution, with the quick service and low prices we now take for granted.

In that same year, the U.S. National Labor Relations Board ruled unions could include pension issues in contract negotiations. That ignited a massive expansion of pension plans.

In the 1950s, pension funds started buying stocks, rather than just bonds or their equivalents; in addition mutual funds came of age. With these two developments working, middle class people became owners of big business. At first, their stakes were modest, but steadily growing.

And in just a few decades, they gained controlling interests in many large corporations through their funds. Management guru Peter Drucker has called it, "...one of the most startling power shifts in economic history."

Now, working people reap the benefits of those investments, collecting much of the profit distributed by McDonald's and other big corporations.

Discover how the pieces fit together. In Big Macs & Our Pensions: Who Gets McDonald's Profits? - a new booklet -(about 25-pages), you will:

• learn more about the McDonald's transformation and its implications for the future
  
• find out how McDonald's makes its profits (and it involves more than selling Quarter Pounders)
  
• meet some of the working people who get McDonald's profits through their pension and mutual funds
  
• find out how low wages became embedded in the fast food industry
  
• hear accusations from critics of McDonald's wages, and
  
• learn who has the ultimate say on fast food wages (the answer may surprise you).

You may not be among the owners of McDonald's. But if you belong to any pension plan, or contribute to a mutual fund or whole life insurance policy, you likely own pieces of some big corporations.

More importantly, though, your retirement income will be bigger and grow more dependably than you would otherwise expect.

Big Macs & Our Pensions: Who Gets McDonald's Profits? is now available at Amazon.com