'Job Creating' Sprint T-Mobile Merger Triggers Estimated 6,000 Non-Covid Layoffs

from the empty-promises dept

Back when T-Mobile and Sprint were trying to gain regulatory approval for their $26 billion merger, executives repeatedly promised the deal would create jobs. Not just a few jobs, but oodles of jobs. Despite the fact that US telecom history indicates such deals almost always trigger mass layoffs, the media dutifully repeated T-Mobile and Sprint executive claims that the deal would create "more than 3,500 additional full-time U.S. employees in the first year and 11,000 more people by 2024."

About that.

Before the ink on the deal was even dry, T-Mobile began shutting down its Metro prepaid business and laying off impacted employees. When asked about the conflicting promises, T-Mobile refused to respond to press inquiries. Now that shutdown has accelerated, with estimates that roughly 6,000 employees at the T-Mobile subsidiary have been laid off as the freshly-merged company closes unwanted prepaid retailers. T-Mobile says the move, which has nothing to do with COVID-19, is just them "optimizing their retail footprint." Industry insiders aren't amused:

"Peter Adderton, the founder of Boost Mobile in Australia and in the U.S. who has been a vocal advocate for the Boost brand and for dealers since the merger was first proposed, figures the latest closures affect about 6,000 people. He cited one dealer who said he has to close 95 stores, some as early as May 1.

In their arguments leading up to the merger finally getting approved, executives at both T-Mobile and Sprint argued that it would not lead to the kind of job losses that many opponents were predicting. They pledged to create jobs, not cut them.

“The whole thing is exactly how we called it, and no one is calling them out. It’s so disingenuous,” Adderton told Fierce, adding that it’s not because of COVID-19. Many retailers in other industries are closing stores during the crisis but plan to reopen once it’s safe to do so."

None of this should be a surprise to anybody. Everybody from unions to Wall Street stock jocks had predicted the deal would trigger anywhere between 15,000 and 30,000 layoffs over time as redundant support, retail, and middle management positions were eliminated. It's what always happens in major US telecom mergers. There is 40 years of very clear, hard data speaking to this point. Yet in a blog post last year (likely to be deleted by this time next year), T-Mobile CEO John Legere not only insisted layoffs would never happen, he effectively accused unions, experts, consumer groups, and a long line of economists of lying:

"This merger is all about creating new, high-quality, high-paying jobs, and the New T-Mobile will be jobs-positive from Day One and every day thereafter. That’s not just a promise. That’s not just a commitment. It’s a fact....These combined efforts will create nearly 5,600 new American customer care jobs by 2021. And New T-Mobile will employ 7,500+ more care professionals by 2024 than the standalone companies would have."

That was never going to happen. Less competition and revolving door, captured regulators and a broken court system means there's less than zero incentive for T-Mobile to do much of anything the company promised while it was wooing regulators. And of course such employment growth is even less likely to happen under a pandemic, which will provide "wonderful" cover for cuts that were going to happen anyway.

Having watched more telecom megadeals like this than I can count, what usually happens is the companies leave things generally alone for about a year to keep employees calm and make it seem like deal critics were being hyperbolic. Then, once the press and public is no longer paying attention (which never takes long), the hatchets come out and the downsizing begins. When the layoffs and reduced competition inevitably arrives, they're either ignored or blamed on something else. In this case, inevitably, COVID-19.

In a few years, the regulators who approved the deal will have moved on to think tank, legal or lobbying positions at the same companies they "regulated." The same press that over-hyped pre-merger promises won't follow back up, because there's no money in that kind of hindsight policy reporting or consumer advocacy. And executives like John Legere (who just quit T-Mobile after selling his $17.5 million NYC penthouse to Giorgio Armani) are dutifully rewarded, with the real world market and human cost of mindless merger mania quickly and intentionally forgotten.

Filed Under: consolidation, jobs, layoffs, mergers, promises
Companies: sprint, t-mobile

Right On Cue, Post-Merger T-Mobile Layoffs Begin

from the round-and-round-we-go dept

US courts and regulators recently rubber stamped the T-Mobile Sprint merger, ignoring forty years of history showing how US telecom megamergers almost always result in less competition, higher prices, and fewer jobs. Eliminating one of just four US wireless carriers is likely to result in higher prices (see: Canada or Ireland). Wall Street analysts and unions alike predict the deal could eliminate anywhere between 10,000 and 30,000 jobs, and data suggests the consolidation could result in employees across the sector making less money even if they work at other companies.

Like most mergers, T-Mobile and Sprint executives have spent a year telling people none of this will actually happen and critics were being hyperbolic. Executives like John Legere (whose leaving in April and thus won't have to bear witness to his own handiwork) insisted repeatedly that the competition-eroding deal would somehow increase competition and create thousands of new, high paying jobs. Real world analysis from numerous experts never supported that, and early returns on those promises aren't looking so hot.

Light Reading late last week reported that with the ink not even dry on the merger, the company was already starting to trim jobs at one of its prepaid phone divisions, Metro:

"According to three people familiar with the company, T-Mobile has laid off a number of employees within its Metro by T-Mobile prepaid business. The extent of the layoffs is unclear. The company couldn't immediately provide a response to questions from Light Reading on the topic.

T-Mobile did not respond to repeated requests from me for comment on the nature of the layoffs. Neither would the company respond to inquiries made by other outlets like Ars Technica or Fierce Wireless. That suggests to me these layoffs were indeed merger related, since T-Mobile could have simply stated that the departures were scheduled pre-merger, assuming that was true.

Peter Adderton, founder of prepaid wireless provider Boost Mobile, was backing the deal just a few months ago. His tone has now completely shifted, and he noted that a lot of these laid off employees were informed of the layoffs during an impersonal conference call:

Like most US telecom mergers, around 4% of the journalists that uncritically hyped this merger's "synergies" will go back in a few years and scrutinize the company's pre-merger promises. And all of the think tankers and analysts that rubber stamped the deal uncritically will go mute in a few years when the price hikes and additional retail and middle management layoffs arrive, pretending they had some other, mysterious origins. This is, apparently, just how we do things in America, a country that seems habitually incapable of learning much of anything from history or experience.

Filed Under: competition, jobs, layoffs, mergers
Companies: sprint, t-mobile

AT&T Ponders Dumping DirecTV After Investor Backlash, But It's Not Likely To Help

from the yeah-that's-not-gonna-work dept

As we just got done noting, investors have finally started to grumble about AT&T's obsession with merger mania (aka "growth for growth's sake"). AT&T, you'll recall, spent more than $150 billion to acquire Time Warner and DirecTV in a bid to dominate the streaming video and online advertising space. But the deals saddled AT&T with so much debt, it forced the company to raise rates despite rising competition, driving many of these customers to the exits. Oh, and AT&T's being sued by other investors for allegedly lying about it. It has also largely bungled its TV branding in general.

In what appears to be an intentional leak designed to suggest that AT&T is taking these concerns seriously, a report emerged this week in the Wall Street Journal (non paywalled alternative read here), suggesting that AT&T may now try to offload DirecTV after paying $67 billion for the company back in 2015:

"The telecom giant has considered various options, including a spinoff of DirecTV into a separate public company and a combination of DirecTV's assets with Dish Network, its satellite-TV rival," the Journal report said, citing "people familiar with the matter." It's still early in the process, so AT&T could end up sticking with DirecTV. "AT&T may ultimately decide to keep DirecTV in the fold. Despite the satellite service's struggles, as consumers drop their TV connections, it still contributes a sizable volume of cash flow and customer accounts to its parent," the Journal reported."

AT&T's decision to spend billions of dollars on a satellite TV company on the eve of the cord cutting revolution was always seen as a shaky bet. Especially given AT&T's decision to freeze most serious investment in the company's fixed-line broadband business. That said, the money DirecTV is currently making is helping to pay off the company's enormous debt load (AT&T's currently in the running for the most heavily-indebted company public letter wasn't kind to AT&T. Notably, the investors took issue with AT&T's belief that you dominate a space by throwing billions of dollars at mergers, something Wall Street usually is keen on thanks to short term gains:

"We firmly believe that AT&T’s M&A strategy has not only contributed directly to its profound share price underperformance, but has also caused distractions that have contributed to the Company’s recent operational underperformance."

That's a polite way of saying AT&T can't just buy its way to domination. But Elliot's suggestion to offload DirecTV won't help much.

The debt from a decade of merger mania would remain, and while the announcement of a sale might boost the markets slightly (allowing Elliot to exit semi-gracefully), it wouldn't fix what's broken at AT&T. Telcos like AT&T and Verizon still suck at wandering outside of their core competencies (building and running networks, lobbying to crush competitors), the result of being government-pampered monopolies for the better part of a generation. As we've seen with Verizon's Go90, AOL, and Yahoo face plants, these companies simply aren't good at adaptation and competition because it's an alien construct.

AT&T executives desperately want AT&T to be Google and Facebook, and have eyed both companies' ad revenues jealously for the better part of the last two decades, thinking that money is somehow owed to them because they own the underlying network (that's really what the net neutrality fight was about). They seem to believe growth for growth's sake and lobbying are the path to domination, but while that worked well in the broadband space, it's not going to work quite as well in helping them gain stature in other markets.

Especially given that as lumbering monopolies fused to the nation's intelligence agencies, neither AT&T nor Verizon has the ability to actually innovate in the space, which is why AT&T's current TV branding efforts look a lot like road kill. AT&T will remain saddled with millions of aging copper and phone lines it is (like most US telcos) too cheap to upgrade despite billions in tax cuts and regulatory favors. Mindless merger mania won't fix the DNA-level problems that plague Ma Bell, and neither will selling off a core component of the company's bumbling, but ongoing, attempt to dominate the video advertising space.

Filed Under: competition, consolidation, cord cutting, divestitutre, mergers, satellite tv, streaming, tv
Companies: at&t, directv

Charter Spectrum Once Again 'Competes' By... Raising Prices

from the nickel-and-dime dept

When Charter Communications (Spectrum) proposed merging with Time Warner Cable and Bright House Networks in 2016, the company repeatedly promised that the amazing "synergies" would lower rates, increase competition, boost employment, and improve the company's services. Of course like countless telecom megamergers before it, that never actually happened. Instead, the company quickly set about raising rates to manage the huge debt load. And its service has been so aggressively terrible, the company almost got kicked out of New York State, something I've never seen in 20 years of covering telecom.

Fast forward to 2019, and despite surging competition from streaming video providers, Charter is once again raising rates on numerous services. Broadband and TV services will all be seeing major price increases next month, as will the company's hardware rental surcharges and the universe of misleading fees the industry uses to covertly jack up the advertised rate post sale. That includes the company's "broadcast TV fee," which is really just a small part of the cost of programming hidden below the line in the form of a (now) $13.50 monthly additional charge:

"With this price change, you will now pay $13.50 a month for broadcast TV fees, which is up from $11.99 a month. This will add up to $162 a year to your bill just watch free over-the-air TV you could get with an antenna."

Note: that fee had already seen a $2 bump early this year.

That Charter's response to increased streaming video competition and record cord cutting is to raise rates tells you plenty about both the level of competition it sees in broadband, and the regulatory oversight of the sector. These hidden fees in particular are something the FCC (under both parties) has been happy to turn a blind eye to. Much in the same way both parties have rubber stamped a long line of telecom and media megamergers that, time and time again, have only really netted one thing: greater sector consolidation, higher rates, fewer jobs, and worse service.

Giants like Comcast and Charter have one ace in the hole when it comes to the streaming video wars to come. They are enjoying growing monopolies over broadband access thanks to the slow, steady implosion of many US telcos. That limited competition has let Comcast respond to cord cutting and streaming by imposing arbitrary and punitive usage caps and overage fees that are incurred when its broadband users use a competitor's services (say Netflix) but not their own TV offerings. This lets them simultaneously cash in on -- and hinder -- streaming competitors.

Charter's banned from doing this due to a few flimsy conditions affixed to its 2016 merger, but those conditions expire in just a few years, meaning you can expect an even fatter broadband bill over the horizon. The FCC having just effectively neutered its oversight authority over telecom at telecom lobbyist behest certainly isn't likely to help, nor is the death of FCC privacy and net neutrality consumer protections.

Filed Under: competition, consolidation, consumer welfare, mergers, monopoly, prices
Companies: charter communications, spectrum

T-Mobile Employees Want Promises They Won't Be Fired Post Merger

from the good-luck-with-that dept

We've noted repeatedly how the Sprint, T-Mobile merger isn't great. There's forty years of history showing how telecom industry megamergers almost always result in less competition, higher prices, and fewer jobs, and this deal is no exception. Eliminating one of just four US wireless carriers is likely to result in higher prices (see: Canada or Ireland). And Wall Street analysts not only predict the deal could eliminate anywhere between 10,000 and 30,000 jobs, data suggests the consolidation could result in employees across the sector making less money even if they work at other companies.

Of course if you ask T-Mobile and Sprint executives, they'll tell you that none of this will actually happen. They'll tell you that the deal will somehow create more competition and jobs, despite (again) history showing that this rarely, if ever happens and such deals almost exclusively benefit executives and shareholders.

Hoping for a little reassurance, T-Mobile employees this week penned a letter to Deutsche Telekom CEO Tim Hoettges (Deutsche Telekom has a majority stake in T-Mobile) asking for guarantees they won't see layoffs and pay cuts in the wake of the deal:

"T-Mobile US retail employees and technicians delivered a letter late Tuesday for Deutsche Telekom CEO Tim Hoettges, seeking assurances that their jobs and paychecks will be safe if the wireless carrier is allowed to merge with Sprint, its smaller rival.

T-Mobile Workers United, with about 500 members and backed by the Communications Workers of America and the German union ver.di, urged Hoettges to “make solid and verifiable” assurances that jobs will be safe, paychecks will not shrink and management will not interfere in union activities."

These workers shouldn't hold their breath.

From Comcast to AT&T, telecom merger after telecom merger begins with a laundry list of promises that nothing whatsoever will change and if things do change, it will only be for the better. Then, everything changes as redundant retail support, and executive positions are inevitably eliminated. It's a finely oiled machine you could set your watch to, yet each time a new merger is proposed the press collectively nods dumbly as if pre-merger guarantees mean much of anything, and government doesn't have a multi-generational history of failing to hold companies accountable when they blatantly ignore merger conditions.

It's a problem that's particularly pronounced in the telecom sector, where tens of thousands of jobs are being lost due to mindless consolidation and a mantra of "growth for growth's sake." Saturated growth in fixed and mobile broadband has driven companies to mergers in the hopes of attaining growth, but as AT&T's Time Warner and DirecTV acquisitions or Frontier's gobbling up of aging phone lines have made clear, being bigger doesn't magically equate to being better. In fact it's usually the opposite as even bigger, debt-saddled companies fail to scale customer service to handle the growth.

Why the US seems incapable of learning from history on this subject is a question for the ages. Right Now, T-Mobile is telling regulators that the merger will magically create thousands of new jobs. It's also promising to keep both Sprint's Overland Park, Kansas and T-Mobile's Bellevue, Washington headquarters both intact. All while we see zero negative impact and increased competition despite fewer overall competitors. History has repeatedly shown such claims to be little more than fluff and nonsense, yet regulators at both the FCC and DOJ (both not coincidentally now run by former telecom lawyers) are happy to believe the promises.

Filed Under: consolidation, employees, jobs, mergers
Companies: sprint, t-mobile

AT&T Loses 1 Million Video Users After Spending Billions On Mergers To Dominate Video

from the whoops-a-daisy dept

This wasn't how it was supposed to go for AT&T. In AT&T executives heads, the 2015, $67 billion acquisition of DirecTV and the 2018 $86 billion acquisition of Time Warner were supposed to be the cornerstones of the company's efforts to dominate video and online video advertising. Instead, the megadeals made AT&T possibly one of the most heavily indebted companies in the world. To recoup that debt, AT&T has ramped up its efforts to nickel-and-dime users at every opportunity, from bogus new wireless fees to price hikes on both its streaming and traditional video services.

Not too surprisingly, these price hikes are now driving subscribers to the exits.

The company's latest earnings report indicates that AT&T not only lost another 778,000 "traditional" video subscribers last quarter (satellite TV, IPTV), but it lost another 168,000 subscribers at its DirecTV Now streaming service -- due to "higher prices and less promotional activity":

"The service had lost 83,000 subscribers in the first quarter after a 267,000 drop in the fourth quarter of 2018. As of the end of June, the service had 1.3 million subscribers. Cowen analyst Colby Synesael had predicted DirecTV Now would lose 50,000 subscribers in the second quarter. The company also lost 778,000 traditional pay TV subscribers in the second quarter between its DirecTV satellite TV and U-Verse services after losing 544,000 in the first quarter, citing "an increase in customers rolling off promotional discounts, competition and lower gross adds due to a focus on the long-term value customer base."

Keep in mind this is happening before the playing field gets flooded with new competitors, like Disney's new Disney+ service, which is expected to launch this November. Disney's pulling most of its content off of services like Netflix and making it exclusive to its platform. Other companies, like Apple and Comcast, also have new streaming ventures in the works with a similar focus on exclusives. As competition heats up, many of these companies are going to be happy to take a temporary loss to establish market share. AT&T can't do that because it's swimming in debt.

Granted, AT&T still has some tricks up its sleeve. Its successful lobbying gambit to kill net neutrality and erode FCC authority over telecom means nobody will really be minding the store as AT&T begins using its dominance of broadband to its tactical advantage. While ISPs have tried to remain on their best behavior as they wait for the result of the multi-AG lawsuit against the FCC (which would restore the net neutrality rules if the FCC loses), AT&T has still managed to try and test the waters with anti-competitive moves like only making usage caps apply to competitors' services.

Should the FCC win its lawsuit, you can expect AT&T's anti-competitive efforts to quickly become far more creative and way less subtle. Because if there's anything history tells us about natural, government-pampered monopolies like AT&T, they're terrible at innovating their way through direct, head to head competition, as these latest quarterly numbers clearly attest. And when you can't win in fair head to head competition, you cheat. It's the American way!

Filed Under: competition, mergers, video
Companies: at&t, directv, time warner

Telecom Union Got Hoodwinked Into Supporting AT&T's Shitty Merger

from the ill-communication dept

You may be shocked to learn this, but nearly all of the promises AT&T made in the lead up to its $86 billion merger with Time Warner wound up not being true.

The company's promise that the deal wouldn't result in price hikes for consumers? False. The company's promise the deal wouldn't result in higher prices for competitors needing access to essential AT&T content like HBO? False. AT&T's promise they wouldn't hide Time Warner content behind exclusivity paywalls? False. The idea that the merger would somehow create more jobs at the company? False.

Of course the press and public aren't the only folks AT&T misled. To glean the support of the telecom sector's biggest union, the Communications Workers of America, AT&T apparently promised that newly acquired Time Warner (and subsidiary) workers would be able to join the union. But when the time came to actually allow those employees in, guess what? AT&T suddenly declared that wouldn't be happening for the vast majority of them:

"Of about 22,000 U.S. employees who previously worked at Time Warner, AT&T claimed the agreement applies to at most 82, a union official wrote in a letter attached to a June court filing. CWA, which already represents about 90,000 AT&T employees, has asked a judge to order arbitration. In May, the company asked that the case be dismissed, saying the company has “the right to determine” which employees are covered by unionization provisions."

Granted if you spend five seconds looking at the history of major mergers in the telecom and media space, none of this should be surprising.

Merger after merger, a universe of amazing promises are revealed that post deal, never actually materialize. Any conditions that are affixed are usually theatrically hollow, and adherence to them is rarely enforced. In AT&T's case, not a single merger condition was affixed to the deal, thanks in large part to a comically-myopic ruling by U.S. District Court Judge Richard Leon, who was oblivious to AT&T's plan to use the death of net neutrality, regulatory capture at the FCC, and ownership of essential content as a competitive bludgeon in the streaming wars to come.

At some point, you'd think that major telecom unions would stop supporting megadeals that almost uniformly result in higher prices, less competition, and fewer jobs (given redundant positions are pretty uniformly eliminated a year or two after the ink is dry). But the CWA pretty routinely can't help itself; it also breathlessly supported AT&T's 2011 merger with T-Mobile, which was ultimately blocked for being exceptionally terrible. Fortunately the CWA seems to recognize the latest megamerger proposal, T-Mobile's planned $26 billion merger with Sprint, is going to be bad for the sector as well.

At some point you'd think that everybody in the chain, from unions and consumers to the press and antitrust enforcers, would realize these industry megadeals are almost always uniformly harmful. Pre-merger promises never materialize, prices routinely go up, and job losses abound; yet each and every time there's a new megadeal proposed we appear to have learned nothing, just like some purgatorial version of Charlie Brown and Lucy football.

Filed Under: mergers, promises, telcos, unions
Companies: at&t, communications workers of america, cwa

AT&T Breaks Another Merger Promise In Making 'Friends' Exclusive

from the who-could-have-predicted-it dept

Last year AT&T defeated the DOJ's challenge to the company's $86 billion merger with Time Warner thanks to a comically narrow reading of the markets by U.S. District Court Judge Richard Leon. At no point in his original 172-page ruling (which approved the deal without a single condition) did Leon show the faintest understanding that AT&T intends to use vertical integration synergistically with the death of net neutrality and neutered FCC oversight to dominate smaller competitors and tilt the entire internet ecosystem in its favor.

While the DOJ lost its original case, it was quick to appeal late last year, highlighting how within weeks of the deal AT&T had jacked up prices on consumers and competitors like Dish Network, which says it was forced to pull HBO from its lineup because it could no longer afford the higher rates.

Critics of the merger had also pointed out how AT&T would likely use the deal to increasingly make content exclusive to its own service, making it harder for competitors to access it. If you'll recall, this was something AT&T CEO Randall Stephenson also insisted wouldn't happen when addressing a Senate antitrust subcommittee pre-merger:

"Nor is there any reason to believe we could use Time Warner programming or AT&T networks to hurt related markets. Simply put, it would be irrational business behavior to do so. Time Warner's programming is more valuable when distributed to as many eyes as possible. Moreover, in order to have great programming, it is imperative that we attract great creative talent to develop it. The best way to attract that talent is through widespread distribution of Time Warner content."

Of course this week AT&T announced it would be taking content like Friends and making it exclusive to its own streaming platforms, including its new looming HBO Max service:

"AT&T will start restricting some Time Warner shows to its own streaming service, despite previously telling the government that it would distribute Time Warner content as widely as possible.

WarnerMedia, the division AT&T created when it bought Time Warner, today announced a new online streaming service called "HBO Max." HBO Max will debut in the spring of 2020 and include exclusives that will no longer be available on other streaming platforms."

On its surface this doesn't seem like that big of a deal. After all, Friends is an old show, and most users probably won't care. And it's certainly not the only show getting this treatment (Comcast NBC Universal just made The Office exclusive to its streaming platform, and Disney is also pulling Netflix content for exclusive use on its own looming Disney+ service). But more broadly, the more essential content AT&T makes exclusive to its own platform (especially and likely inevitably, HBO), the more difficult it will be to compete with AT&T. Knowing AT&T, there's going to be far more exclusives where this came from.

This is all before you even get to net neutrality and AT&T's domination in broadband, which has allowed it to behave anti-competitively in different, even more problematic ways (like only imposing arbitrary usage caps if you use a competitor's service). Letting companies like Comcast NBC Universal and AT&T Time Warner dominate both the conduit and the content will ultimately result in a universe of headaches for competitors and consumers alike. And Judge Leon's failure to see (or acknowledge) this will be a "gift" that keeps on giving for the next decade.

The other major problem these ongoing exclusives have is they increasingly force consumers to hunt and peck through a growing, cumbersome list of subscription services just to find the content they're looking for. And if subscription price and ease of use isn't managed carefully, it's simply going to drive frustrated users back to piracy. And when that happens, history suggests these companies will blame everybody and everything (ban VPNS!) but themselves for it.

All of that said, I'm not sure banning exclusive content deals is the answer. What would be at least part the answer for maintaining healthier markets? Finally realizing that endless media consolidation and mindless mega-mergers are generally harmful to the media and telecom sector (as now AT&T owned HBO and DC comics employees are just starting to figure out post merger). And that the long list of promises made in the ramp up to such super unions are almost always uniformly empty. There are fifty years of data for clear supporting evidence, especially in telecom.

Filed Under: content, friends, lies, mergers, promises, silos, streaming
Companies: at&t, hbo, netflix, time warner