Of course, in the same way that no best man ever gives a wedding speech talking about how the union may turn out to be a disaster, AT&T CEO Randall Stephenson's remarks in the press release announcing the half-stock, half-cash deal were overwhelmingly positive.
"This is a perfect match of two companies with complementary strengths who can bring a fresh approach to how the media and communications industry works for customers, content creators, distributors and advertisers," said Stephenson, who will run the combined company. "Premium content always wins. It has been true on the big screen, the TV screen and now it's proving true on the mobile screen. We'll have the world's best premium content with the networks to deliver it to every screen."
That sounds great, but what looks good on paper does not always turn out in the way you expect. In looking at the five biggest media mergers as noted by Bloomberg, it's easy to see how the union of AT&T and Time Warner could be happily ever after or lead shareholders to wonder what happened.
Disney buys ABC
When Walt Disney (NYSE:DIS) spent $19 billion to buy Capitol Cities/ABC, the parent company of the ABC broadcast network and ESPN, it was a case of a media company buying more of the same. The move, made in July 1995, gave the Mouse House added distribution and more content, but at the time of the deal, it already owned a number of cable networks.
The move was not an immediate success, at least for stockholders, as the share price stayed relatively flat until 2012 when it began to move staunchly upward. But while it took over a decade for the benefits of this deal to be realized, it was a very logical combination when it was announced. Disney was a creative powerhouse that would be obtaining improved distribution for its content while ABC would no longer be at the mercy of studios it did not control.
Clearly, Disney and Capitol Cities had matching assets, but figuring out how to combine the two was not so simple. ABC already aired Disney programming, so that part was easy, but merging ESPN -- arguably the crown jewel of the deal -- into the company as a whole led to some massive missteps like Disney buying a National Hockey League Team (the no-longer Mighty Ducks of Anaheim).
It could be argued that this purchase, while ultimately successful, cost former CEO Michael Eisner his job. In retrospect, that seems silly as ESPN (despite its current struggles) has turned into a cash cow for the company and owning a television network has helped drive Disney profitability. This was not a merger that worked quickly, but it has to be considered a major success.
ClearChannel buys AMFM
Now called iHeartMedia, the former Clear Channel Communications was primarily a company that owned radio stations. At the time it spent just under $16 billion to buy AMFM in October 1999, it was the third-largest owner of radio stations while the company it merged with was the largest.
The combined entity became a media powerhouse with 830 radio stations, 425,000 billboards, and 19 television stations. In theory, this should have created a company that dominated the advertising market, but people running Clear Channel had clearly underestimated just how disruptive the internet would be to radio specifically.
This deal made sense in the moment it happened and all the subsequent problems the company experienced likely would have been worse had they stayed separate. Still, it's hard to call doubling down on radio right before that market became much less lucrative anything other than a failure.
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