Is Merger Mania Over? Time-Warner, AT&T Deal Signal End of Era

by David Grasso, GenFKD

Recent decades have seen the rise of “merger mania” wherein large companies have been consolidating at a breakneck speed, concerning policy makers and the general public alike. The latest proposed mega-merger between communications giant AT&T and the king of content, Time Warner (owns CNN, HBO) faces serious hurdles, particularly as President-elect Donald Trump promised to kill the merger during the campaign.

Today, it was splashed across the papers that lawmakers are “concerned” about the merger, which would not be the first high-profile merger attempt to fail in recent times.

Comcast tried to buy Time Warner Cable (confusingly, a completely separate entity from Time Warner) and that deal died because of consumer and government concern. Meanwhile, the proposed drug giant that would have been born from the Pfizer-Allergan merger met its demise as well.

The deaths of these recent deals don’t bode well for the future of mergers. While major mergers are still taking place, it appears we are entering an era where there is increased skepticism about mergers between mega-companies.

Why the anti-merger sentiment?

Some say mergers are not necessarily a bad phenomenon. There can be significant cost savings in combining companies, which benefits both consumers and shareholders.

On the other hand, there’s little doubt that nothing keeps us on our toes like good-ole- fashioned competition. Whether it’s in your personal life or in the world of business, we are a competitive species and calibrate our behavior to our surroundings. In a capitalist society, competition is needed for markets to function properly. This is why the latest round of merger mania has some people concerned that whole sectors of the economy are becoming less competitive and subject to concentrated influence in the hands of a few.

Corporate monoculture

We’re already living in the shadow of merger mania; look no further than the travel industry to see how consolidated the landscape has become.

 

If you go to a travel website to book a trip, perhaps you would visit Expedia, Orbitz, Travelocity, Homeaway, Hotwire, or Hotels.com. You might be shocked to learn that all of those websites now belong to…

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