US Press Softsells The Real Scope Of AT&T's Merger Incompetence, Ensuring It Will Happen Again

from the not-with-a-bang-but-with-a-whimper dept

Under former CEO Randall Stephenson, AT&T spent nearly $200 billion on mergers with DirecTV and Time Warner, hoping this would secure its ability to dominate the pay TV space through brute force. But the exact opposite happened. Saddled with so much debt from the deal, AT&T passed on annoying price hikes to its consumers. It also embraced a branding strategy so damn confusing — with so many different product names — it even confused its own employees.

All told, AT&T lost 9.5 million customers in just over four years. Not exactly the kind of “domination” the company envisioned. Meanwhile, employees also paid the price. Despite billions in regulatory favors (killing net neutrality and broadband privacy rules) and a $42 billion tax break from the Trump administration for literally doing less than nothing, AT&T has also laid off more than 50,000 employees since 2017. The company also took an axe to several well-loved brands (Mad Magazine, DC’s Vertigo Comic imprint) as its executives crashed and bounced their way around unfamiliar businesses.

Last week AT&T finally completed its spinoff of DirecTV. Kind of a sad little whimper to the company’s original vision. Yet somehow, much of the sterile news coverage of the whole mess doesn’t capture the real scale or scope of the failure.

The New York Post, for example, can’t be bothered to mention a single layoff or a cite a single AT&T misstep. The same thing over at CNET, where the final chapter in AT&T’s ugly saga is framed in this detached, oddly clinical way, completely avoiding pointing out AT&T incompetence or the human wreckage these deals left behind. This is how spending $200 billion on mergers that resulted in massive layoffs and utter organizational chaos is described by the outlet:

“The DirecTV transaction is just one of two major media shake-ups at AT&T, which is in the process of restructuring itself after spending billions of dollars acquiring media companies in recent years.”

This is kind of the status quo in American megamerger business coverage. Many major outlets are simply terrified of offending advertisers or sources at these companies. So they’ll happily parrot most pre-merger promises of “synergies,” but when things go south (as they usually do in mindless telecom and media consolidation) they just… don’t mention the real world human impact at all, then hope nobody notices. I tend to notice having covered telecom and media for 20 years, and witnessed more bungled, regulator rubber stamped megadeals than I care to remember.

A little side irony: the hundreds of billions of dollars (often taxpayer subsidized) AT&T and Verizon repeatedly throw at bungled mergers and doomed projects (crappy app stores, Go90, mobile payment platforms with the same names as terrorist organizations, news outlets that ban reporters from talking about important things) could have funded fiber to every home in America (a consistent, massive revenue source) several times over. That just gets forgotten as Congress bickers over whether $65 billion in broadband investment is wasteful.

Of course the press isn’t the only one who will rabbit hole AT&T’s failures. The regulators, politicians, judges, pundits, and think tankers that cheered on these deals will pretend none of this ever happened, and will never have to reckon with the real world harm of mindless consolidation and a “growth for growth’s sake” mindset. In part because the US press generally won’t require them to. If journalism is really about clearly explaining the truth to people, avoiding essential context because it might make your event donors, advertisers, and sources mad is… not that.

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Companies: at&t, directv, time warner

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Comments on “US Press Softsells The Real Scope Of AT&T's Merger Incompetence, Ensuring It Will Happen Again”

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The company also took an axe to several well-loved brands (Mad Magazine, DC’s Vertigo Comic imprint)

Warner had been slowly smothering Vertigo for years, well before the AT&T merger.

There’s a lot of stuff AT&T mismanaged, badly. You’re absolutely right about Mad. But Vertigo? Nah. That was a fait accompli as far back as Paul Levitz’s ouster in 2009.


a fun site to check out

Well who’s in charge of corporations, anyway? Investors! It’s their money that’s getting piled up in a huge mountain and set on fire by these nitwits.

Check out seekingalpha sometime, an investor site, and look for stories about AT&T (easy to find, just search for T). It’s become a running joke how many articles slamming AT&T there have been. A new one every day. The comments sections are a lot more fun than you’d think from a group that worries about P/E ratios and ARPU (not a Simpsons character).

The way to stop another AT&T is for investors to wise up and give them no money.

James Burkhardtsays:

Re: Re: a fun site to check out

You aren’t really wrong, but I feel the need to note that, generally, investors is the term to use for funders of a private company. Generally, for a company that has been public for longer than I’ve been alive, you describe them as shareholders. Its a different level of control and a different dynamic.


Re: Re: Re: Re: a fun site to check out

I’ve seen investors and shareholders used interchangeably. If you buy a share, you’re an investor. And how much control you have definitely depends on the number of shares you buy.

Shareholders can have a lot of power, especially in aggregate. Right now with AT&T the big issue is the income investors who expected to get dividends from AT&T doing their boring telephone thing. But instead they decided to try the high wire media act (growth, not income), and fell off the wire.

So they’ve managed to piss off both groups. Their share price is stagnant. Management teams that oversee a stagnant share price aren’t well regarded and there can be consequences.


Re: Re: Re: Re: Re: Re: a fun site to check out

Anyway getting back to the point of this article, if you want to get the real scoop about a publicly traded company, read shareholder commentary. Nobody is parrotting any press releases when they are ranting about the dividends they’re not getting or a stagnant share price.


Re: Re: Re:2 Re: Re: Re: Re: a fun site to check out

Shareholders are perfectly fine with utterly destructive corporations as long as they are getting their cut, however, so they are best taken in an "even the shareholders…" context where appropriate. That entire class of people has been driving corporate culture (and law), the stuff that’s been such lovely fun since the 70s-80s.

James Burkhardtsays:

Re: Re: Re:2 Re: Re: Re: Re: a fun site to check out

As i said, you aren?t wrong. Part of the issue is, in your original post, you use investors interchangibly with shareholders, those who trade ownership of a public company but don?t actually put any money into the company, at the beginning, but discuss Venture capitalists, those who invest in private companies and thereby directly fund them, as investors as well. These are two different groups and using the same term for them furthers the confusion that already exists thanks to the ignorance of journalists, hollywood, and the general public and is exacerbated by the flood of retail investors in the last decade and the imprecision of english and the word invest.

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