How Do Consumers Perceive

Corporate Mergers?

Anjali Lai, Community Manager

Kristopher Arcand, Community Manager June 20, 2014

© 2014 Forrester Research, Inc. Reproduction Prohibited

How do consumers perceive corporate mergers?

In the past six months alone, we have witnessed a series of announcements indicating potential mergers between large telecommunications companies. From Time Warner Cable’s deal with Comcast to AT&T’s merger with DirecTV, these companies are changing the face of the industry landscape in swift, sweeping steps. With such major shifts on the horizon, business leaders and consumers alike are debating questions such as: What will these mergers mean for the customer experience? How will these mergers affect overall brand perception?

Will consumers respond by changing their behavior?

Forrester Research tracked consumers’ reactions to the series of merger announcements by tuning into relevant online conversations as they unfolded over the past six months. Forrester also leveraged its ConsumerVoices Market Research Online Community to get a pulse on consumer awareness of the news, interest in the potential changes, and opinions about what these mergers will mean to individuals.

© 2014 Forrester Research, Inc. Reproduction Prohibited

Regardless of whether they are current customers of a company that is proposing to merge, consumers are generally wary of such

corporate shifts because they fear:

Increased Costs

Consumers are concerned about the mergers’ potential for increased costs, reduced market competition, and decreased service quality

Fewer Choices Loss of Quality

“As a stockholder I

like it. As a

consumer, not as

much. If these types

of companies had

fair pricing I would

give them my

support [but] I fear

they will use their

power to raise rates.”

“I do not view big

mergers like this in a

positive way

because it reduces

competition.

Mergers might give

you more bells and

whistles in your

packages… but

most people don’t

need the bells and

whistles anyway.”

“I think this is just

more bad news for

customers. These

companies, from

what I hear, really

don’t care about

their customers.”

“I don’t think a bigger

company will do

anything better,

more likely it will

be worse.”

Source: Forrester’s ConsumerVoices Market Research Online Community, Q2 2014 (US)

© 2014 Forrester Research, Inc. Reproduction Prohibited

On the other side of the coin, consumers do appreciate the opportunities for innovation that the mergers afford

Source: NetBase Aggregated Social Listening Data, April - June 2014 (Global); Forrester’s ConsumerVoices Market Research Online Community, Q2 2014 (US)

While consumer-generated online conversation about each individual

company is characterized by neutral or negative sentiment, dialogue

addressing both companies in combination is significantly more positive:

Conversation Topic: Consumer-generated social chatter that includes insight-rich text

about the topics listed below.

Sentiment: A score representing how positive or negative

commentary is, where -100% is extremely negative,

0 is neutral and 100% is extremely positive.

AT&T 13%

DirecTV 18%

AT&T and DirecTV 23%

Time Warner Cable -2%

Comcast -23%

Time Warner Cable and Comcast 40%

“The idea of the innovations that might arise from combined services is

intriguing. It would be wonderful if this [merger] advances technology and

[results] in more features for users.”

© 2014 Forrester Research, Inc. Reproduction Prohibited

By being transparent about the real advantages at hand, companies can capitalize on consumers’ appetite for innovation

“Opponents of the [AT&T and DirecTV] merger who fear reduced competition in

pay-TV services are missing the bigger transformations that are reshaping the

telecommunications landscape… This step is only a means to a bigger end… to

build a ubiquitous digital platform.” - Jim Nail

While consumers respond to the idea of a large corporate merger with

uncertainty, few also recognize and appreciate the potential for more

innovative service.

Therefore, companies that effectively communicate the benefits of such

mergers and set expectations about potential changes in cost up-front

take the first step in quelling consumer fears and pivoting the conversation

to address the imminent improvements.

To learn more, see the May 2014 report: Quick Take: AT&T Buys DirecTV

To Launch Its Digital Platform Ambitions.

© 2014 Forrester Research, Inc. Reproduction Prohibited

How we can help you DATA-DRIVEN INSIGHTS THAT PROVIDE A 360° VIEW OF THE CONSUMER

Technographics Survey Data

Who are they? What do they say they do?

Technographics Behavioral Data

What, where, and when are they doing things?

Technographics Qualitative Data

Why are they doing it? Why are they saying it?

Technographics Social Listening Data

What are they talking about? How are they

talking about it?

Want to learn more about Forrester’s data offerings, take a look at Data Services.