The PowerOne Merger

Editor & Publisher Magazine this morning asked us to comment about (a) the merger of PowerOne Media, Inc., and Employment Specialists, L.L.C., owner of Employment Wizard and Careersite, and (b) PowerOne’s acquisition of employment voice technology company , The Center for American Jobs.

Though we congratulate all the companies involved, we did express three philosophical worries to Editor & Publisher:

First, companies generally choose to merge when the economy of their industry isn’t vibrant enough for them to win by competion — and that’s certainly what has happened here in the online newspaper industry. The resulting merged company will gain economies of scale and claim this is an advantage for its customers; however, it’s actually an advantage for the merged company over its customers.

Second, is it a good for the U.S. newspaper industry that two vendors (CareerBuilder and the post-merger PowerOne), now hold a nearly 90% market share when measured by customer print circulation? We think that market share hold is good for these vendor but not for their customers.

Third, although the majority of PowerOne equity shares are owned by newspaper companies, that doesn’t necessarily mean that those newspapers control PowerOne. Although most newspapers have common interests, not all do, including all in one board of directors. It’s often easy for a company’s management, who desire to run their own company, to play the owners against each other. So, just because newspapers own the majority of shares, that doesn’t necessarily means that they’ll run PowerOne for their interests.

We have nothing against PowerOne or CareerBuilder. Indeed, we think those are good companies with good managers. But we’d prefer to see more two competing vendors controlling more than 90% of this market.