by Mike Masnick
Mon, Aug 18th 2008 8:37pm
While we do believe that there can be so-called "synergies" in various mergers and acquisitions, it often does seem as though companies over state what those benefits may be. Take, for example, the news that TV channel Fox News has set up shop on Facebook, rather than the social network's main competitor, MySpace. MySpace just so happens to be owned by Fox -- so it may seem odd that Fox News chose to go with Facebook rather than sister company MySpace. Basically, it appears that Fox News recognized that it was more likely to find an audience on Facebook than MySpace. This highlights just how silly some expected "synergies" often turn out to be. While many may have expected that the close relationship between Fox News and MySpace would mean that there's some advantage to both organizations to work together, the truth was the opposite. If Fox News had gone with MySpace instead, due to "synergies," (i.e., management mandates that those two companies work together) the end effect would have been worse. Fox News would have gone with the social network that didn't fit as well -- just to please management. So, rather than a "benefit" the so-called synergy would have been a net negative. In other words, the so-called "synergies" wouldn't actually have been... well... synergistic. The end result shows why so many mergers over so-called "synergies" don't really make much sense. If there's true synergy between the separate organizations, then they can work together as partners, rather than from within the same company. Otherwise, you get a situation where you may be locked in to a partner who is not as good as one outside your organization. (Post updated to clarify).
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