Is the Information Age Worth the Price? : Mega-Mergers: The only winners have been shareholders.
“Decades from now, when the Information Age is fully understood reality rather than a semimyth,” writes one business reporter, the PacTel-SBC telecommunications merger “will be seen as a milestone.” But what’s truly revealing about this $17-billion hookup is less its supposed portent of a coming information age than the vapid celebration it is occasioning.
In the late 1960s, the prospect of a smaller communications industry merger--between ITT and ABC--provoked fierce criticism and federal intervention. Today, there is only a hint of unease amid the upbeat forecasts about stock payouts and the accolades to “competition.” What is at stake in this gargantuan shift of corporate assets?
By any standard beyond the bottom line, the PacTel-SBC combination raises deeply worrisome issues. Let’s ask about three:
What jobs stand to be created by this move? Since the AT&T; divestiture of 1984, the telecommunications industry has eliminated 250,000 employees. PacTel is proceeding apace with its own plan, now 80% complete, to cut 10,000 positions. “It is a rare corporate merger that doesn’t produce redundancies that, when eliminated, translate into lower costs,” writes a frank Wall Street Journal analyst. What, then, is the likelihood that the PacTel buyout will reverse the dismal record of the telecommunications industry in generating and sustaining well-paid, full-time employment?
Is there any reason to expect the combination of SBC with PacTel to improve democratic oversight and accountability for this strategically crucial industry? California’s Public Utility Commission has a relatively vigorous record of regulatory intervention in telecommunications. How can that record be enhanced by the relocation of corporate decision-making to a distant state?
Surging corporate media concentration might be called a preemptive reaction to the continuing deregulation of the telecommunications industry, and it has already begun to evince its usual retrograde effects: Disney’s acquisition of Cap Cities/ABC, and Westinghouse’s takeover of CBS, for example, both served as occasions for capitulations in independent network news coverage of the tobacco industry. How, we must ask, will yet another multibillion-dollar communication industry merger result in greater access to significant information for more of the population?
The true beneficiaries of this buyout are favored stockholder groups and, of course, the acquisition and merger departments of the big investment banks. Behind all the smoke and mirrors about the information age, they are exacting a steep price from our democracy and our economy.
