Some mergers just don't make sense



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In these days of lackluster business performance, mergers and acquisitions are still popular. An organization buys a competitor, presuming to combine the revenues of both organizations. Those working in positions deemed redundant in the new company are laid off, increasing productivity, reducing overhead and further enhancing profits.How can you lose?Interestingly, it hardly ever works out that way. The promised returns remain elusive, and even the best-laid plans fail to be realized. Even startups that want to be acquired often wish they hadn't been. And sometimes the combined business model just doesn't make sense.Classical music lovers in Southern New Hampshire have listened to WCRB for years. The Boston-area station can be heard with little interference almost to Concord. NHPR cancelled classical programming years ago, leaving little choice to New Hampshire's classical music lovers.WGBH, another Boston-area station, had some classical music programming, but it tended to be the really heavy stuff, which is not all that popular. As a result, WCRB was sort of the only show in town, and it was popular.However, the station started adding all kinds of things, like traffic reports, for instance. Those weren't necessarily bad, but they had to be paid for. It seemed like there was more and more advertising as a result.Unfortunately, many of those commercials were actually made for rock ‘n' roll stations and were offensive to classical music lovers. A moment or two might have been bearable, but the seemingly endless stream caused many of us to switch to iPods, CDs or some other medium at the beginning of the stream.At one point, the station offered commercial-free programming from 9 a.m. until noon, and that was great. But without commercials there was no revenue, so they had to make up for it later.Making a sour noteThe next thing we heard, the station was going commercial-free. It sounded great, but I wondered what the catch might be.Sure enough, it was bought by WGBH, which transferred its classical music programming from the 89.7 FM station to the WCRB 99.5 FM station.Now here's the part of the business model that just doesn't make sense. WCRB listeners chose to put up with commercials to a degree to listen to popular classical music, even when they knew there was a commercial-free alternative with less-popular music. How can WGBH possibly think it can force feed its new stuff to this audience?This music is obscure and unpopular for a reason: it's not pleasing. With federal funding at risk, I would think the newly merged station would want to attract as many listeners as possible.The key is in playing what audiences want. There just may not be enough obscure music lovers around to fill the WCRB-WGBH coffers. Two different markets, and they're not the same.This is just one example of a merger and acquisition that probably looked good on paper, but there are many. When Compaq swallowed Digital Equipment, they almost choked, and they both made computers. HP didn't learn from that experience. It swallowed the Compaq-Digital combination and went on to buy EMS.Short-term results sound OK, but why is it getting to be such a hard place to work?Are you thinking of buying a competitor? Think carefully and do lots of research. Remember, the devil is, in fact, in the details - those things you don't want to take the time to define right now.Anybody want to start a classical music station around here?Ronald J. Bourque is a consultant and speaker from Windham who has had engagements throughout the U.S. and in Europe and Asia. He can be reached at 603-898-1871;RonBourque@myfairpoint.net; or bourqueai.com.

 

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