Promises, promises
The press release announcing any new merger or acquisition is always quick to announce the benefit to the consumer first, the stockholder maybe second, and the principals (CEOs, investment bankers, lawyers) never. But, taking a critical look at such activities, it's hard to see that many direct consumer benefits, or at least benefits that don't come with a price.
Examples:
- Did the merger of Wachovia and First Union Bank lower checking fees or improve customer service for their customers?
- Did Exxon's merger with Mobil or Texaco's merger with Chevron make their gasoline cheaper, better, more convenient?
- Is your Chrysler or your Mercedes any better or cheaper than it was before the two companies merged?
- Did South African Breweries takeover of Miller improve the taste of Miller beers or lower prices?
- Do Oreos or Philadelphia Cream Cheese taste better or cost less, or improve nutritionally because Nabisco and Kraft were sold by RJ Reynolds to Philip Morris?
Of course, some very good products are more available because they were acquired by bigger companies (such as Silk brand soy milk), but even there they often simply displace as local brand or products or create a new need that never existed before. It's also the case that the stability of being part of a bigger company may save other products from going extinct.
In most cases, I believe. M&As are neutral to the consumer, and in other cases, a detriment. That's the thrust of an online Slate article by Robe Walker called "Selling Cable's Latest 'Golden Age' ", 7/11/2001) . He discusses the unlikely benefits of the acquisition by Comcast of AT&T's cable TV business, a move that made Comcast the US's leading cable company.
Of course, the cable companies invariably imply that whatever new corporate-level maneuver they're engaged in--merger, acquisition, spin-off, whatever--is sure to move its customers closer to the promised land of satisfaction. "Consumers will benefit from a golden age of new products we'll introduce," pledged Comcast's honcho earlier this week, "from video on demand to television commerce." Presumably these wonderful things will come about thanks to various efficiencies made possible by economies of scale in the new, larger entity, etc., etc.
Maybe all of that is great news if you run a cable company, but I'm less convinced that it will mean anything for cable consumers apart from the opportunity to buy a larger number of expensive services without any real price break for their personal contribution to the "synergy" ideal.
Events have borne out his laments. As a Comcast cable subscriber myself I can attest that prices keep going up while nothing particularly improves. That's no major complaint against Comcast, which also delivers by cable modem connection and is no worse than other companies, but it has not improved at all since the acquisition in any way that I am aware of.
