Streamlining the Postal Service, when a merger fails and ‘Who lost Ukraine?’
This piece has been updated with a postscript at the end.
1. Postal Service blues:
Last week’s report that the U.S. Postal Service lost another $1.9 billion in the last financial quarter made me yearn for a story detailing the cost constraints afflicting this largest and most hidebound of government services. Everything from union restrictions, to legacy pension obligations, to congressional pressure that keeps even the smallest rural post office not only open but open on Saturdays, to lobbyist strong-arming that keeps the service from using its 32,000 retail footprints to offer other services.
Here’s the way for a reporter to write this: Completely reimagine the Postal Service by supposing it was sold to a private company. In fact, suppose the uber-opposite of a government agency — Amazon — bought it.
What would the real estate be worth if a more efficient company, freed from congressional oversight, bought the agency and slimmed down its holdings, cashing in on some of the premium properties scattered through every town, while using those that remain to offer all kinds of additional retail services?
What would Amazon’s Jeff Bezos do with what the Postal Service’s website says is its $47 billion payroll, not to mention its 211,000 vehicles?
What efficiencies could be achieved by radically streamlined operations? What would that look like? Who would be the victims, from among its 626,000 employees to people who still depend on delivery of 158 billion pieces of snail mail processed annually? How could the government require in the sales contract that some of this collateral damage be limited?
There’s also the question of what all this would mean for the seller. How much of a dent in the federal deficit could be achieved through a cash sale or, more likely, a sale involving cash up front plus a formula-driven back-end payment over an extended period.
With online shopping continuing to proliferate, it seems clear that a thoroughly reconstituted postal service could flourish under leadership that has the freedom to reimagine its business and redeploy its assets.
It would be great to read how.
2. Investment bankers in panic mode:
In the wake of the collapse of the merger between advertising holding company giants Publicis Groupe SA and Omnicom Group Ltd , this story on the website Moneynews.com reports that a group of investment bankers — chiefly from Rothschild and the boutique firm Moelis & Co., but also Morgan Stanley and Bank of America — will lose out on all but a fraction of the $70 million in fees they would have gotten had the deal gone through.
I’d like to know more.
We’re used to reading stories about triumphant bankers raking in millions when their deals happen.
But what about when they fail? As the merger foundered and kept being delayed following its announcement last July, what were the bankers doing to keep these obvious Hatfields and McCoys from breaking the engagement? Was the fiasco in part their fault, because they didn’t recognize or downplayed the various issues — from taxes to culture — that eventually caused the breakup?
After all those months of trying to make the deal happen, there was so much money at stake for the bankers that I’d love to be a fly on the wall — especially in the final days, as they tried to keep the deal from slipping away.
I particularly want to know what Moelis founder Kenneth Moelis was doing. Was he a statesman, confirming to his client Omnicom that the split was for the best? Or was he trying to keep it together until the end?
As this New York Times article points out:
When Moelis & Company began wooing prospective investors for its initial public offering earlier this year, one of its main talking points was its presence on big deals.
Now, one of the biggest of those transactions, the $35 billion merger of the ad agency giants Publicis and Omnicom, has fallen apart, leaving the investment bank with a little egg on its face.
When the deal was announced, it became not only one of the biggest mergers of 2013, it also served as a showcase for the rise of boutique and independent investment banks…
3. Ukraine and interviews I’d like to see:
As Ukraine continues to fall to the Russians, can’t someone put a microphone in front of former Vice President Dick Cheney, former acting U.N. Ambassador John Bolten or other fierce critics of President Barack Obamaand ask them about Russia’s invasion of Georgia during the years of the Bush administration, and what they would have done in the case of Ukraine — in light of the fact that they did nothing in Georgia?
Postcript: I have since discovered that Charlie Rose was on this case on March 9, when he guest-hosted Face the Nation. His discussion with Cheney is here.
PHOTO (TOP): U.S. postal service trucks sit parked at the post office in Del Mar, California November 13, 2013. REUTERS/Mike Blake
PHOTO (INSERT): Former Vice President Dick Cheney leaves after attending the funeral service of former British Prime Minister Margaret Thatcher at St Paul’s Cathedral, in London, April 17, 2013. REUTERS/Olivia Harris