Last month it was announced that AT&T intended to purchase Time Warner for $85.4 billion. The merger, which would bring together two giants in telecommunications and media, is far from certain. There are considerable hoops and hurdles yet to maneuver as the business deal will be scrutinized by federal regulators. There is skepticism from consumers, investors, and politicians. What about Christians?
The potential merger would combine AT&T, the second biggest wireless company and a conduit to distribute entertainment, with Time Warner, one of the world’s largest producers of content, including HBO, TNT, CNN, and Warner Bros. The business community, whose overriding concern is return to investors, is unconvinced that the merger is a good idea. The infamous AOL purchase of Time Warner for $165 billion (nearly twice the bid price for AT&T) and its aftermath has not been forgotten. Evidence of this suspicion was the stock market’s unenthusiastic reaction to the potential merger, with the price of AT&T stock dropping some 8 percent since the announcement.
Consumers and politicians are less concerned with the business acumen of the deal than they are with the reduction of competition, resulting in higher prices. The CEOs of AT&T and Time Warner have claimed that there will be no price increases, and that if anything prices will decrease. They are promising a disruption within the traditional entertainment model that will benefit consumers.
A Christian perspective on business mergers should consider other stakeholders and implications beyond the aforementioned concerns, however. Although there is no explicit teaching in the Bible regarding mergers and acquisitions, a guiding principle might be the biblical ideas of justice, mercy, and humility, as described in Micah 6:8. Further, Jesus taught that the mere following (or appearance of following) the law may hide greed and self-indulgence and that it is insufficient to follow the law alone while neglecting to be just and merciful.
A guiding principle for mergers might be the biblical ideas of justice, mercy, and humility.
Following this, we must recognize that one reality of mergers is the impact on employees. Duplications resulting from merged companies typically necessitate employee layoffs. (Granted, certain mergers are necessary for a company’s survival and from a utilitarian perspective, some layoffs are preferable to an entire company’s collapse with all employees losing their jobs.) Max DePree, former CEO of Herman Miller, writes in Leadership Jazz that employees should not be regarded solely as individuals, but as people with families. DePree stresses that layoffs, which are indeed horrendous to employees, have even further-reaching implications. The lives of spouses, partners, and children can be uprooted with long-term consequences. Layoffs and disrupted lives resulting from mergers should not be dismissed as insignificant. Fortunately, in the case of AT&T and Time Warner, there may be few layoffs because the merger is vertical, with little duplication.
Another consideration should be the unique consequences (and severity) associated with a particular merger. For example, consolidation within the finance industry contributed to systemic risk and “too big to fail” institutions. When the financial crisis occurred, people lost homes and retirement savings. Taxpayers were forced to fund a bailout in the trillions of dollars. Consolidation in the pharmaceutical industry may be partially blamed for the exorbitant high costs of prescriptions that are unaffordable to many. In contrast, the consequences of an AT&T merger with Time Warner may be minor. If the worst outcome is that it costs more to watch HBO’s Game of Thrones, this would be relatively inconsequential.
Mergers are an integral aspect of business and capitalism. Like all mergers, the legality of the proposed purchase of Time Warner by AT&T should be scrutinized by regulators before it is granted approval. From a Christian perspective there may be further considerations that are rooted in justice, mercy, and humility. Such concerns might include the impact on all stakeholders (e.g., employees) and the severity of its consequences. With the merger of AT&T and Time Warner, however, these concerns appear minimal.