from the repeat-the-same-mistakes-over-and-over-again dept
U.S. media mergers always follow the same trajectory. Pre-merger, executives promise all manner of amazing synergies and deal benefits. Post-merger, not only to those benefits generally never arrive, the debt from the acquisition spree usually results in significant layoffs, lower quality product, and higher rates for consumers. The Time Warner Discovery disaster was the poster child for this phenomenon.
After paying Trump his $16 million bribe, CBS and Skydance (Trump’s friends in the Ellison family) recently finalized their $8 billion merger. And executives are already indicating that one of the first orders of business will be to fire a significant number of employees.
On the bright side, at least new CBS President Jeff Shell (fired from Comcast after allegations of sexual harassment) is being up front about the fact the layoffs will be massive and “painful”:
“We do not want to be a company that has layoffs every quarter. So, it’s going to be painful. It’s always hard, but we don’t want to be a company that every quarter is laying people off. So, it is important for us to get done what we’re doing in one big thing and then be done with it.”
The thing is, merger related promises both before and after the deal are always meaningless. The layoffs are driven by debt from acquisitions, and the new CBS has been making plenty of those, including a new $7.7 billion deal to acquire the exclusive rights to MMA fights. And a likely acquisition of Bari Weiss’ right wing propaganda mill The Free Press.
When the new CBS inevitably faces headwinds, consumers and employees are always first to bear the brunt of any real-world pain. These deals almost never improve product or markets or serve the public interest. They exist to temporarily goose stock valuations, create massive tax breaks through convoluted financial transactions, and let fail-upward type executives pretend they’re “savvy dealmakers.”
This happens every time there’s a major merger of this type. But not only do U.S. regulators endlessly rubber stamp these kinds of deals, the U.S. press routinely fails to mention any of this historical context in their coverage. So the pattern repeats itself over and over again, with nobody in any position of management financially incentivized to learn anything from each experience.
If the CBS deal follows past mergers, they’ll fire a whole bunch of people in a month or two. Then they’ll fire significantly more once executives demonstrate they don’t really know what they’re doing. Prices will soar, product quality will deteriorate, and after several years of dysfunction the executives responsible will fail upward toward other companies where the process will repeat itself all over again.
Filed Under: antitrust reform, consolidation, journalism, labor, layoffs, media, mergers
Companies: cbs, paramount, skydance
