In 2002, the Atlanta Journal and the Atlanta Constitution, once fierce competitors, merged to become the Atlanta Journal-Constitution, the only remaining daily newspaper in the city.
a. Before the merger, each of the separate newspapers was losing about $10 million per year. What forecast would you make for the merged firms' profits? Explain.
b. Before the merger, each newspaper cut advertising rates substantially. What explanation might there be for such a strategy? After the merger, what do you think happened to the Atlanta Journal-Constitution's advertising rates?