Quote:
Originally Posted by speakingtohe
Expecting a business to act in a way that the business feels would take away from their bottom line is an excercise in futility.
Helen
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The thing is, a fair amount of corporate mergers don't add to the bottom line at all. In a lot of cases the short-tern disruption and distraction from the merger efforts negates the estimated benefits. And in a lot of cases a merger designed to achieve higher efficiencies through consolidation results in higher overhead because the combined company ends up with a lower market share than the two individual companies held.
The economist has a column on this, from last week:
http://www.economist.com/news/financ...america-may-be
Quote:
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Merger studies support this. The “winner’s curse” describes the phenomenon of mergers destroying value for the shareholders of an acquiring firm. Research by McKinsey, a consultancy, provides one explanation: close to two-thirds of managers overestimate the economies of scale a merger will deliver, often overegging the benefits by more than 25%. Size can even drive costs up, if firms get too big to manage efficiently.
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The question here is that the reason publishing has become concentrated to the extent it is (whether it is 'too concentrated" or not) is for a series of reasons that in many cases no longer apply. But the gut reaction of the bigger players continues to be to try to get bigger because it has always worked for them in the *past*.
As the Economist points out, getting bigger sooner or later hits a point where it becomes counter-productive.
In the case of the Random Penguin the stated rationale for the merger bodes ill for consumers and authors but the people who should be most leery are the stockholders.