Mergers create layoffs, but also open up the job market



    With mega-media mergers as the soup-of-the-day, the job market could go either way.

    “Historically when there are large mergers there are layoffs within a year or two,” said Gerry Sanders, professor of strategy at BYU’s Marriott School of Management.

    However, he said that a merger such as with AOL and Time Warner Inc. probably would not see much change in available jobs because each company focuses on different sectors of the media.

    The loss of jobs would occur at the administrative level because a company does not need two presidents, Sanders said.

    Companies merging from different sectors of the media may actually need to increase their number of employees according to Kathryn Hale, principle analyst for Dataquest’s e-business group in a press release.

    “Traditional media companies need to double their interactive media staff,” Hale said.

    If not, they could risk loosing their audiences to AOL-TimeWarner, Hale said.

    Laurie Wilson, chair of the communications department at BYU, said that she sees employment opportunities growing in the media industry for communications students.

    “Content is still the driving factor and we are content producers,” she said.

    Instead of seeing adverse effects in the job market from mega-media mergers, Wilson said she sees phenomenal opportunities.

    “This is probably one of the most promising fields for the future,” Wilson said.

    According to Sanders, companies merging from the same market sector are the ones that will cut jobs.

    “When Zion’s Bank and First Security Bank merged they announced there would be job cuts,” Sanders said.

    The reason for job cuts in the bank merger were because both companies engaged in the same type of business, so there was redundancy in the types of employees working for the newly merged company, Sanders said.

    For example, the merger announced Jan. 24 between Time Warner and EMI Group may see as many as 3,000 jobs cut in the next three years according to The Associated Press. Both companies have business dealings in the music industry.

    Don Livingstone, director of the Center for Entrepreneurship at BYU, said there are more reasons for layoffs than just overlap of employees.

    “AOL has lost billions of dollars in market value because many people question whether it (the merger with Time Warner) will work,” Livingstone said. “The market really punished their stocks.”

    A decrease in stock value and the increase of debt in a mega-merger can also cause a people to lose jobs,” Livingstone said.

    Print Friendly, PDF & Email