Telecommunications Merger Brings Irony to Reporting

By Vandana Sinha
February 1, 2005 09:21 AM

The nation's business reporters found irony in the merger talks between AT&T Corp. and SBC Communications Inc.

They pounced on the twist that SBC, one of seven Baby Bell companies formed when the government split AT&T in 1984, is attempting to take over its former parent company for $16 billion. That spawned several clichéd lines of a mother being eaten by its young.

"Why is 'Ma Bell' suddenly in talks to get gobbled up by one of her own offspring?" began one story in The Chicago Tribune.

Along with others, that Tribune piece caught another irony -- that a merger of this magnitude was dubbed "unthinkable" eight years ago by then Federal Communications Commission Chairman Reed Hundt. Today, thanks to fiery competition, the story quotes Hundt as calling the deal "almost inevitable."

Beyond the irony, business reporters grasped the news' significance: It would create the country's largest telecommunications company. And that could catch the eye, and pocketbook, of other major players like Verizon Communications Inc., another former Baby Bell.

"The reunion of two players in the old Bell system could set off another round of mergers in the rapidly consolidating phone industry," writes Ken Belson, reporter for The New York Times, which broke the story along with The Wall Street Journal. "Even if the talks stall, the industry reformation is likely to continue apace."

A handful of newspapers clarified the reformation thus far for readers. The Tribune, The Los Angeles Times and The San Francisco Chronicle told the phone industry's 30-year evolution through accompanying timelines.

The New York Times noted: "Regardless of whether AT&T is bought in the near future, that the company that created phone service in America could be for sale suggests how fast the industry has changed."

Some stories weighed each company's gains from the union -- AT&T, its stability, and SBC, a Who's Who corporate client list. Other stories discussed whether customer phone bills would climb or fall. The Wall Street Journal included a graph of local, long distance, wireless and Internet fees last year, compared with a decade ago.

Some reporters wondered how much regulatory scrutiny AT&T and SBC would likely face and what implications FCC Chairman Michael Powell's resignation in March would have.

"The Bush administration and his FCC appointees have generally backed telecom mergers and gave quick approval to last year's $41 billion takeover of AT&T Wireless Services Inc. by Cingular Wireless," writes The Boston Globereporter Peter J. Howe.

And the Los Angeles Times wrapped up its report with one more irony: AT&T's wireless arm crafted the free cellular long-distance plans that later cut into its own residential long-distance profits.

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