BIG by Matt Stoller

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AT&T Admits Its Time Warner Merger Failed
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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.

Matt Stoller
May 17, 2021
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Welcome to BIG, a newsletter on the politics of monopoly power. If you’d like to sign up to receive issues over email, you can do so here. 

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.’)

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M Glohr
May 17, 2021

At first I disagreed with this post- isn't this breakup just the market working? Shareholders are free to leave at any time, and putting the government - the biggest monopolist of them all - in front of making business decisions scares me even more. That said, mergers between public corporations are far too often (always??) driven by C-level payouts like the Bewkes example. The wasteful and harmful disruption of companies and workers' wellbeing, all for one or two executives to join the Forbes list, indicates epic rent-seeking and failure of board governance. For a start, tie CEO compensation to post-merger stock performance. Most mergers will suddenly not look so appealing.

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