At & T Vs Time Warner Merger

SGMT  6050  –  Case  Write-­‐Up   McCaw   Cellular  Communications:  The  AT&T/McCaw  Merger   Negotiation     Armin  Ezatagha     Student  Number  ⏐  205  576  707   eMail  ⏐  aezatagha12@schulich.yorku.ca     Schulich  School  of  Business   Tuesday,  March  05,  2013                                 Current  Telecommunications  Ecosystem     McCaw  Cellular  Communications  (MCC),  although  positioned

In 1982, the Justice department ordered the separation of ATT into local subsidiaries. MCI was one of the main competitors of AT&T and the impact of this new competition on MCI was uncertain. In this case the financial impact of this increased competition will be analyzed.

To summarize, AT&T has a very organized management team that is always planning new things for the company’s well being. The AT&T managers believe in happy employees and happy customers. The company offers great employee benefits and salaries and by doing this they keep the employees working for the company a longer length of time. AT&T realizes that the longer the employees are with the company the more educated they are about the products and services and about company regulations. In turn AT&T spends less money training new employees because the employees that are with the company stay with the company as long as possible. AT&T also manages to keep long lasting relationships with the customers with different things like bundles and by introducing

Our case study titled, The AT&T and McCaw merger negotiation, provides us with an opportunity to negotiate the terms of the merger between McCaw cellular and AT&T. McCaw was the largest competitor in the rapidly growing cellular telephone communications industry. AT&T was the dominant competitor in long-distance telephone communications in the United States, and one of the largest corporations. Prior to the negotiations, it had no position in cellular communications.

If they are able to maintain the loyalty of most of their current customers, the companies will then have a shared amount of about 100 million customers. This potential customer volume for the merging companies would greatly outnumber the customer volume of the industry leaders, AT&T and Verizon. This kind of turnout would create greater competition between the two merging companies and the two leading companies (Sprint Wireless News, 2014). Although the outcomes seem promising for Sprint and T-Mobile, there are also potential negative effects of a merger that the companies should take into consideration. Current Sprint and T-Mobile customers have expressed their fear of the possible merger for multiple reasons. The two biggest worries for telecommunication services consumers is the potential for rising costs and a reduction in provider options (John, 2016). In making a final decision, the companies, as well as the Federal Communications Commission, should weigh the advantages and disadvantages of a

From 1984 until 1996 AT&T was an integrated telecommunications services and equipment company, succeeding in a newly competitive environment. In 1995 On September 20, AT&T announces that it is restructuring into three separate companies: a services company, retaining the AT&T name; a products and systems company (later named Lucent Technologies) and a computer company (which reassumed the NCR name). Lucent is spun off in October 1996, and NCR in December, 1996. Three years later AT&T announces general availability of its local residential telephone service in New York with a bundled plan called "AT&T Local One Rate New York." This is AT&T's first general reentry into the consumer local telephone business since the breakup of the Bell System. It occurs under the provisions of the Telecommunications Act of 1996. The Telecommunications Act triggered dramatic changes in the competitive landscape. SBC Communications Inc. established itself as a global communications provider by acquiring Pacific Telesis Group (1997), Southern New England Telecommunications (1998) and Ameritech Corp. (1999). In 2005, SBC Communications Inc. acquired AT&T Corp., creating the new AT&T. With the merger of AT&T and BellSouth in 2006, and the consolidated ownership of Cingular Wireless and YELLOWPAGES.COM, AT&T is positioned to lead our industry in one of its most significant transformations since the first

This organization encourages the development of a comprehensive work environment where all employees are respected and can achieve at their fullest potential. AT&T has a very strong culture and their values are not only shared with management, but by all employees. While mergers are known to affect an organization’s culture, AT & T has proven success with at least three mergers. In October of 2004 AT&T completed a merger with Cingular to become AT&T wireless. In November of 2005, SBC and AT&T finalized their union and with that AT&T Corporation became AT&T Incorporated. The organization became the largest phone company in the United States when they acquired SBC, serving 13 states in the western and southwestern part of the U.S. Their latest acquisition came in Mar of 2006 when Bellsouth was purchased ("AT&T Inc." Notable Corporate Chronologies Online Version, 2006). With the merger of Bellsouth, AT&T picked up another nine states in the Southeast to provide available service in a total of 22 states (Reardon, 2006). The merger of AT&T and BellSouth, along with the consolidation of Cingular Wireless, will continue advancement in the communications and entertainment industry, where they will continue to invent new resolutions for consumers and businesses. These accomplishments prove that AT&T has a successful organizational culture.

In the competitive environment, Comcast does not get threatened with new entries into the market very often as the cable and satellite industry is very costly to enter. Comcast also does not have much supplier power so that does not factor very heavily into their strategy, especially now with the increase in streaming and satellite services for television. However, the other three forces in the Porter’s five forces model are all very active in Comcast’s business model (10K Comcast, 2017). The consumers subscribing to Comcast and the businesses advertising with Comcast do possess a certain degree of buyer power, this forces Comcast to keep their prices competitive and relevant to current demands in the market (10K Comcast, 2017). The threat of substitution in this industry is growing, this can be attributed to poor customer service, higher fees and the growth of online streaming services such as Netflix and Hulu that are taking customers away from traditional cable and satellite companies (Levy,2016).

 As a consequence of the governments intervention, the AT&T lawsuit settlement, as well as the shift in the telecommunication industry, it was clear that AT&Ts local telecommunication business was slowly moving away from a monopoly franchise environment. It was moving towards a more competitive environment characterized with more consumer choice and greater competition. Companies such as IBM saw the divestiture of AT&T as an opportunity to provide new telecommunication equipment and services, which would allow them to gain a higher market share. AT&T's stock had up till then been regarded as a stable utility-type stock because of its steady growth and consistent dividend yield. However, AT&T should have kept in mind that they would not have as much market control in the future as they did prior the divestiture, much due to the intensifying competition and regulatory environment changes.

The FCC’s move will allow companies like Comcast, AT&T and Verizon to charge internet companies for speedier access to consumers and to block outside services they don’t like. The change also axes a host of consumer protections, including privacy requirements and rules barring unfair practices that gave consumers an avenue to pursue complaints about price gouging.

Over the next four years, AT&T took action to succeed in changing the environment. It invested 35 billion dollars upgrades to its infrastructure. By mid –2000 AT&T had evolving networks- data, broadband and wireless. IN January 2005, AT&T bought SBC for 16 billion dollars and this created the industry’s premier communications and networking company. And just recently AT&T has merged with Cingular to created even more ties to what you like.

Time Warner Corporation has numerous subsidiaries which are moving media materials across media boundaries. They are doing this in numerous ways, based on synergies and joint ventures. For example some of these include gaining more access to cable lines by a joint venture with US West, and merging with AOL. They are also using a tactic called co-development as properties are knitted together by sister companies both interested in profiting off of them. This is a type of synergy because it occurs within one media conglomerate itself, and it encourages cross-media activity between the two sister companies. Time Warner can place some of its music on its television shows or movies, or write about its

Most companies are competitors this is a fundamental property of modern American capitalism. If you are competing with someone you most likely don't get along. So it seems highly improbable that all the companies in this country would agree and make the switch at the same time. All it would take is one company not to make the switch, and most people would switch to that provider resulting in what I call a lack of trust therefore a lack of guts. An example of this is when you and a friend who like to play practical jokes agree to jump into a cold river. When you both run towards the river and jump

* AT&T should take advantage from slowing down in the merger activity and lower premiums. If negotiations take a long time, situation can reverse, driving the costs of acquisition up

AT&T was broken up into the Bell companies in “1974 by the U.S. Department of Justice antitrust suit against the monopoly” (From Wikipedia, the free encyclopedia). Today AT&T has become a competitor vying for control of the telecommunications industry. “In monopolistic competition, there are many firms vying for control of one market. Each firm offers a different type of product, as opposed to perfect competition in which all offer the same product. Each firm, then, has a monopoly in the market of their own product”(Oracle ThinkQuest Education Foundation) AT&T in 1988 began purchasing stock in Sun Microsystems to begin its diversity in product services. Throughout the 90s AT&T continued purchasing more computer companies and cell phone companies to gain market share in the growing telecommunication industry (CyberStreet). Good pricing structures align with costs. AT&T Wireless realized that the marginal cost of a cellular minute was small compared to the cost of acquiring and maintaining customers. Their switch to a flat fee “One-Rate” plan was a huge success, stealing heavy users away from the competition. Prices increased for light users and many became hooked on the cellular lifestyle (Lake Partners Strategy Consultants, Inc. [LPSCI], 2001-2004). AT&T has seen that the ability to change quickly in the ever-evolving telecommunications market will help in gain market share. Its ability to see the value in keeping customers rather