Lots of good discussion here, but something that is missing is this: BOTH the NYC and the PRR were money losers AS RAILROADS long before the P-C merger ever took place. Both were kept afloat by their "diversified holdings" (i.e., businesses they "invested" in so they had some profits to prop up the money-losing railroad). The whole point of the P-C merger was to generate cost savings from the elimination of duplicate main lines, branch lines, and terminals in order to consolidate operations into a system that was smaller and therefore more cost-effective. This, of course, they were not allowed to do.
The NYC and PRR operated in the worst possible environment for railroads at that time. The northeast was densely populated, with lots of cities (and thus, lots of terminals) and short line hauls, and their properties were taxed at obscene levels, because they were businesses that couldn't pull up stakes and move to the sunbelt (as much of their customer base was doing through this period).
If you want a general reason for the failure of the merger, you're asking the wrong question. The individual railroads were not viable businesses given their operating environment BEFORE they were merged. Why? Government regulations that still treated the railroad industry like it was a transportation monopoly, half a century after it was no such thing. Government subsidized competing modes, including highways, waterways, and aviation, such that much profitable business for the railroads was lost - yet they were forced to continue servicing the business left without the ability to rationalize their physical plant to match their reduced needs, and were not allowed to charge profitable rates (or lower rates to prevent loss of business that if not lost would still be profitable at the reduced rates). In addition, the ridiculous featherbedding of organized labor (including "firemen" on DIESELS, brakemen on road trains whose job was mainly to enjoy the scenery, "full crew" laws in certain of their states of operation that required even MORE superfluous crew members, 100-mile "days," etc.) prevented the railroads from making a profit even if they could get and keep the traffic, because their trains were infinitely more expensive to run than they should have been.
The claims that mismanagement, deferred maintenance, incompatible computers, management styles, etc. are the reason for the failure of the P-C merger are not correct. The seeds for the failure of BOTH railroads were sown prior to the merger. All of these issues may have hastened the speed with which the edifice collapsed, but it was going to collapse anyway without what ultimately resulted FROM the collapse. Remember Conrail in its early years looked like little more than a big blue PC, with similar results. Continued operating losses, despite stupendous sums of money being poured into track and equipment, and the repeated need for more infusions of taxpayer money to keep it going, were the norm in those days. Only after CR was able to shed commuter operations, drive away unprofitable business, price the business it did pursue freely, abandon excess trackage, and whittle down crew sizes (and stop paying the "job for life" labor payments) was CR able to become a profitable enterprise. Given these freedoms, it is quite possible that not only NYC and PRR but EL and perhaps even other northeastern RRs could have survived, but it took the imminent collapse of the entirety of northeastern railroading to wake up the idiots in Washington to the mess that they created in the first place.
GE, not EMD, makes the best locomotives now; has for over 20 years. Get over it.