The AT&T/Time Warner Merger

The AT&T/Time Warner Merger

AT&T’s motivation for the merger was to expand its business operations. The new merger would lead to the realization of new business opportunities. The saturation in the wireless business had reduced the company’s market share, threatening its ability to acquire new entities. Time Warner had $68 billion worth of market capitalization, and AT&T’s market capitalization was estimated at $233 billion (Gryta, n.d). The deal would create a new point of diversification beyond America’s wireless business activities, which had gained stiff competition. This merger makes business sense for an entity such as AT&T that seeks to remain profitable. As a certain sector gains more players, the supply exceeds demand. This affects the pricing of products and services that the market players offer. As prices reduce due to increased supply and better bargaining power among buyers, the companies’ profitability reduces significantly. Such a situation demands that players demonstrate more creativity and find new ways to diversify their products and services. Such an approach ensures that a company remains relevant and retains or increases its market share. At the same time, the differentiation of an organization is important due to the market’s saturation.

Mergers and acquisitions are expected to observe the regulations that govern business activities. This merger failed due to conditions that were placed by regulators. The regulators were conservative about allowing such a merger in the media sector for a specific reason. In the past, Comcast Corp. and General Electric Co.’s NBC Universal highlighted various misgivings that influenced future regulations. Therefore, the regulations were the main hurdle to the success of the merger. In addition, Time Warner seemed reluctant to join the merger due to the franchise network it had created by the time AT&T approached them (Gryta, n.d). Our assignment writing services will allow you to attend to more important tasks as our experts handle your task.

Reference

Gryta, T. (n.d). AT&T Reaches Deal to Buy Time Warner for $85.4 Billion.

ORDER A PLAGIARISM-FREE PAPER HERE

We’ll write everything from scratch

The AT&T Time Warner Merger

Read the weekly readings, in particular the AT&T/Time Warner merger announcement. It was announced earlier this year that AT&T is spinning off the Time Warner unit, effectively admitting to the world that this was a failed strategic move. Knowing this, please answer the following questions:

What, in your estimation, was the motivation behind this merger, i.e., why is AT&T doing this? What evidence supports your position, and why does it make sense, or not make sense, for AT&T to pursue this strategy? You must reference the chapter material/PowerPoint slides when posting your answer.
Given what you know about merger and acquisition success and failure, why do you suppose that this merger failed as it did? Explain. Your answer must reference the M&A failure document.
Note that your answer MUST include relevant material and concepts from the reading. As the point of this discussion is to apply the module material, knowledge of that material is requisite.