Bigger is Better (Even When You’re Smaller)
by Bernie Arnason
The communications industry is in the midst of merger mania, which could combine already large conglomerates into even bigger behemoths. The announced mergers include Comcast buying Time Warner cable, which if approved, would create a company with 30+ million customers. On the heels of this megamerger, just this week, AT&T announced they intend to buy DirecTV for $49 billion ($67 billion if you include assumed debt), which would create a combined 26 million pay-TV subscribers to join AT&T’s 100+ million wireless subscribers.
These mergers have to go through lengthy approval processes from both federal and state governments, so they are by no means done deals. But they represent a move by large companies to become even larger; industry analysts predict their approval may accelerate even more megamergers, as competitors feel a need to get bigger to compete. Sprint and T-Mobile are already rumored to be in advanced discussions and you can probably count on one or two more megamergers to be proposed in the near future.
What does that mean for smaller independents? I would contend it’s generally good news. Ironically, the bigger is better merger trend can benefit smaller companies. Larger companies tend to struggle with customer service, particularly at the level of small markets. By becoming even larger, these company’s customer service struggles will more than likely continue. Customers don’t like being treated as a number, yet these megamergers tend to accentuate just that.
Additionally, these megamergers draw a lot of attention from the press and media and can distract these companies as they navigate the approval process. Chances are, your and their customers have heard about these mergers and may be concerned about how it impacts them. If you compete with any of these large companies, there may be a window of opportunity to seize on this and inform these customers about your better record of customer service and community involvement. Remind them that they’re “not just a number” to you. It may resonate with them during this time of heightened megamerger awareness.