Executive Pay: The Curious Case of Carlos Ghosn’s Arrest
February 12, 2025
The recent India Pakistan skirmishes have brought the issue of a nuclear Armageddon to the forefront of international politics. The news channels in both countries, as well as the international media, have been discussing the possibility of the situation escalating into an all-out nuclear war. The question of the futility of such a war has […]
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AT&T is one of the biggest phone companies in the world. In fact, this was the company that first started building telephones. On the other hand, Time Warner is a giant in the media space. It owns major media channels like HBO and CNN. Each of these companies is gigantic in their own right. This means that a merger of these two companies would create a corporate giant. This is why such a merger was being blocked by many people. The American justice department filed an anti-trust lawsuit against this merger. Also, the American President, i.e., Donald Trump himself was opposed to the deal. He was asked about his opinions on this deal when he was a Presidential candidate. He categorically mentioned that if this deal went through, it would end up concentrating a lot of power in the hands of very few people.
Hence it would be safe to say that the public opinion was opposed to this mega-deal. However, AT&T and Time Warner justified this merger stating that it was inevitable that they merge to form a single company if they have to deal with companies like Netflix and Google. As a result, a tightly contested lawsuit was fought between the justice department and these mega-corporations. The final result is that the court has given its go-ahead to this merger. The justice department has vowed to continue its fight. However, for now, they could not stop the $109 billion mergers between these two companies.
In this article, we will have a look at some of the common objections that were raised against this merger.
Also, this merger is being financed by using large amounts of debt. The problem with leveraged buyouts is that the buyers do not seem to have a long time range. This means that they are in for making a quick buck and have a time frame of three to five years. A lot of strategic investments dont start making money in such a short span of time. This makes the investors panic-stricken and their sudden frantic decisions sometimes end up causing irreversible loss to the underlying corporation.
To sum it up, the odds are stacked against the Time Warner-AT&T deal. Odds are that this deal will end up causing severe damage to at least some of the stakeholders.
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