AT&T Admits Its Time Warner Merger Failed

Time Warner ex-CEO Jeff Bewkes got a $400 million golden parachute. Everything else about the merger was a disaster.

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Three years after its $88 billion merger with Time Warner, AT&T is now trying to spin off its media assets and combine them with yet another media conglomerate, Discovery. There will be a lot to say about this attempt to further consolidate the media business, but it’s important to underscore a basic point. The AT&T-Time Warner merger, like most mega-mergers, was a disaster, causing layoffs, acrimony among artists, and eroding the HBO brand, which was one of the highest quality brands in Hollywood.

There was never any logic to this stupid merger except that Jeff Bewkes, Time Warner’s then-CEO, wanted his $400 million golden parachute. There are times when mergers can be useful, such as if there’s a failing firm, or a business owner wants to retire or try something new. But these mega-mergers are ridiculous. As we rethink merger law, it’s time to recognize that mergers are usually destructive, and corporate leaders should have to prove that a corporate combination is a good idea before the government lets it go forward. That’s how much of 19th century political economy worked, and it made sense. The AT&T-Time Warner fiasco, on top of dozens of other fiascos, is a good example of why.

(A key purpose of the new WarnerMedia and Discovery merger is layoffs and reduced power by creators, which is why AT&T is bragging about $3 billion in ‘synergies.’)