It’s a 2006 movie starring Denzel Washington. It’s also a term taken from French literally meaning “already seen.” The phenomenon of having the strong sensation that an event or experience currently being experienced has been experienced in the past.
The there’s the expression – as Yogi Berra put it – “Déjà Vu All Over Again.” And that’s what I’m afraid Sprint is about to experience with the proposed DISH merger.
In the interest of full disclosure, I was a Director at Sprint for years and a consultant to them after I left, so I’ve seen things from both sides of the campus fence and I have a great deal of loyalty to them. After all, they hold the keys to my retirement!
I went on to build a thriving consulting practice all because of what I learned at Sprint and the contacts I made while there. And I still have friends still there and have owned a Sprint cell phone from the first day they were available in Kansas City.
The week I was laid off, the Star‘s Merriam Pepper wrote an incredible article about me in the business section entitled, “Better Off Laid Off.”
That led me to sitting at my desk for four days nonstop, talking to sobbing men and women who’d also just been laid off, and counseling them and helping them decide what to do going forward. The article also led me to having coffee with Paul Henson at the Pan Pan, on several occasions, so there’s no axe to grind here.
This is just my common sense analysis.
While I don’t expect to see a DISH approval, I predict a failed outcome if this “phenomenon” takes place. Again.
Why? Because Sprint has gone down this path before, back in December, 2004 with Nextel.
I don’t think anyone bought into that at the time, but the merger was approved a few days later and just outside Washington D.C., Nextel exec Tim Donahue walked on stage in his Dockers and sport shirt to rally support for the just announced merger.
Donahue finished his talk by shouting to the audience, “Now…LET’S ALL GO STICK IT TO VERIZON!!!!!”
The crowd went wild.
Then Forsee strolled on stage in his Brooks Brothers suit and delivered a Power Point presentation of his vision of what the two companies would become.
A hush fell over the crowd, a hush that remained until the actual merger proved that everything was going south as fast as this DISH deal would if approved.
In the initial analysis of the Nextel merger; Sprint added 136,000 customers with Nextel, but lost 364,000 customers overall.
And in its final analysis of the Nextel merger; Ivestopedia ranked Sprint/Nextel as one of the biggest merger failures of all time. Right up there alongside such epic fails as the New York Central/Penn Railroad, Quaker Oats/Snapple and America Online/Time Warner.
What fine company!
Forsee was the only winner, as his severance package added up to over $40 million, including a $1.5 million salary through 2009, $5 million in bonuses, stock options worth $23 million and an $84,000-a-month pension. For life.
Sprint, on the other hand, wrote down $29.7 billion of the $36 billion it paid for Nextel in 2005, 80% of the value of Nextel at the time of acquisition.
Sprint has a culture and over the years, in my opinion, the culture became the customer. Most of the Sprint Nextel merger failed over cultural clashes between the two entities. Clashes that often meant employees didn’t execute post-integration plans.
Everyone knew there was going to be redundant functions within the two companies. Redundant functions result in layoffs. Layoffs result in fear. Fear generates scared employees. When employees are scared they act to protect themselves first as opposed to helping the two companies “realize synergies”.
“Screw your synergy, I have a house payment, 2.5 kids and my Johnson County image to maintain!”
Of late under Dan Hesse’s leadership, much of that culture has begun to shift, but it’s not where it needs to be yet. Hesse’s done a yeoman’s job of turning that big ship around. Customer Service is on top of its game and improvement has been seen in many areas.
A close friend of mine at Sprint has engineered much of that change. But has it changed enough to make the DISH merger work? I don’t think so, and it wouldn’t all be Sprint’s fault if it didn’t.
Back in the early Nextel merger days, countless old friends and associates told me, “There’s a bullet in here with my name on it….. and someone is looking for the gun”.
If a cultural clash between Sprint and Nextel wasn’t bad enough, differences in systems, technology and processes made it almost doomed from Day
One. One of Sprint’s main strategic imperatives was its deep seeded desire to be in the push-to-talk market. They felt they needed to be in that space to attract more customers from the “trades,” the people who used PTT. Sprint’s technology at that time would have resulted in a 1.5 second delay both ways if they used their own platform. Nextel owned the PTT market.
It looked like an instant solution except for that one little detail; Sprint and Nextel shared two divergent technologies, employees, goals and – there’s that word again – cultures.
The proposed DISH merger and the Nextel merger smell like the same soup served cold one more time.
And the odd part to me is that no one seems of be having that “Déjà vu all over again” feeling.
For a better understanding of why I think this is doomed, let’s look at who DISH is. The Denver Post stated last week, “With its reputation of being one of the most difficult companies to work for in America, Dish Network’s corporate culture would probably clash with just about any potential merger partner.”
It went on to state that, “Much of the reportedly toxic atmosphere at Dish traces to co-founder and chairman Charlie Ergen, a famously frugal billionaire and self-admitted micro-manager who had signed every company check until about eight years ago.”
In a Kansas City Star full page letter to whoever the hell cared, Ergen said: “We look forward to the opportunity to work together with Sprint’s board and its management team to develop a combined vision, remaining mindful of how it will benefit customers, employees, shareholders and, of course, the Kansas City community. As things move forward, we will stay in touch.”
“He knows if he’s going to buy another company or merge with another company, it may require him to change some of the culture at Dish to do it,” said Judianne Atencio, Dish’s communications director from 1996 to 2006.
Is there an upside if the cultures can meld into one happy, dysfunctional data and telecom family?
Sure, tons of upside.
Sprint would be loaded up with spectrum – more than AT&T and Verizon Wireless combined. Sprint has 55 million customers; just think of what DISH could pump into your iPhone in the form of video and high-speed internet.
DISH/Sprint could package all of your video/data/telecom needs, all the time, in your home, on your smart phone, tablet or lap top!
A match made in data heaven? I don’t think so.
Early off the record comments from friends already list a host of issues ranging from DISH being opposed to casual attire all the way to their basic opposition to “work from home,” which so many Sprint employees now do.
And trust me, if this goes down as merger, DISH would be the partner on top!
There’s nothing harder in this world to change than “culture.”
Think about what the word means for a minute and then take a look through these rose colored merger glasses. It doesn’t matter if the culture issue is “East of / West of Troost” or if it’s opposite sides of the boardroom table. There really is no difference.
Culture brought down one merger, why would this one be different given all we’ve seen so far?
DISH doesn’t even look like a good one night stand, let alone marriage material when it comes to Sprint.
I’ll follow up with another review of this little high finance biz fest as things progress.