...Briefly describe the selected negotiation. AT&T, the second largest mobile provider, has very recently reached an agreement to purchase the media conglomerate Time Warner Inc for more than $85 million. This union comes only two years after AT&T acquired DirectTV, the nation’s largest satellite television provider. The two companies have been in talks about the possible merger since August. This merger will give AT&T, which falls second to Verizon in the mobile phone industry, entrance in the world of media and entertainment. Examine the issues versus the interests of the parties involved. Determine how this difference affected the negotiation. This merger could make AT&T an entertainment empire. The AT&T and Time Warner union comes...
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...AT&T Merging with Comcast Tonya Mealey, Teneisha Bonner, and Richard Chan ECON220-X-1302B-02/Professor Luzius July 14th, 2013 Abstract For our group 5 project, we have collected information about the company AT&T merging with Comcast. In this paper, the industry description introduces the company and explains the history of the company. The supportive argument and the argument against the merger are discussed. Keywords: AT&T, Comcast AT&T Merging with Comcast Initially, Comcast proposed to buy AT&T Broadband for 44.5 billion in assets and 13.5 billion in deficit assumption. AT&T’s committee did not accept the acquisition and Comcast offered to merge with AT&T broadband to establish AT&T Comcast. AT&T assets have been dropping and this coalition would probably help them by letting Comcast, which has a great understanding in the broadband business, work with the many resources AT&T has to present. The merger is set at $72 billion. Comcast thinks the coalition with AT&T will keep them rich and it will get 2.2 million broadband consumers and 22 million co responders, news and entertainment supporters. They are evaluating the merger to decide if the aftermath will be an accomplishment or a downfall (Brinkerhoff, 2010). Industry Description: AT&T, is considered to be a telecommunications industry, and is among the world’s premier voice, video, and data communications companies serving millions of consumers, businesses...
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...and Time Warner Merger One of the largest and most controversial proposed mergers in recent history is the acquisition of Time Warner Cable by Comcast. This proposed acquisition was structured through a friendly agreement between Time Warner Cable and Comcast. Comcast, the initiator of this merger, is set to acquire Time Warner Cable’s eleven million managed service subscribers, Time Warner’s other equity holdings in areas such as Sterling Enterprises and DukeNet Communications, along with it’s local programming and news stations. The proposed method of financing for this acquisition is a stock-for-stock transaction. Through this Comcast will acquire all of Time Warner’s 284.9 million outstanding shares for an equity stake in Comcast amounting to 45.2 billion dollars at the current market value (Comcast 1). In order to address competitive market failure concerns associated with the proposed acquisition, Comcast structured a mutual agreement with competing firm Charter Communications under which Comcast will divest 1.4 million existing Time Warner Cable customers to Charter for cash, along with a trade of 1.6 million customers between Charter and Comcast in order to promote and greater enhance the geographic market presence of both firms (Kang 2). Through this additional action Comcast and Charter seek to improve operational efficiencies, grow customer satisfaction, and better deploy technology in their respective markets (Comcast 1). As stated earlier this merger is extremely...
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...Diversification Strategies Kenneth Thomas Strayer University Contemporary Business 508 November 2, 2011 Dr. Dennis Darlark Diversification Strategies Diversification strategies in today’s business world can allow a company to increase its presence and product line to increase shareholder value in an ever changing economy. A well thought out mix of product development and acquisitions through mergers can reap a company many inherent rewards while expanding on their core business, while a plan that was not properly executed or researched can cause a diversification attempt to severely devalue the company’s net worth. In the following pages I will show two examples, first 3M whose strategies in diversifying brought forth a favorable outcome and the AOL Time Warner merger which did not prove to be the success everyone had hoped. Successful Diversification This section will help describe the success of 3M. “When most people think of 3M Co., adhesives and hooks used to hang posters or pictures typically come to mind.”(Pohl, K. 2007) 3M can be classified as “a diversified technology company with a presence in industrial and transportation; health care; display and graphics; consumer and office; safety, security and protection services,” (Reuters, 2011). The products that have come from these service areas have propelled the company into a global presence. 3M has operations in over 65 countries and product sales in nearly 200 countries. (3M, 2011) Global sales...
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...Environmental Scan Paper Jessica Swindler MGT 498 April 7th, 2015 T. Dunning Environmental Scan Paper A strategic plan helps a company excel during good times and maneuver through tough times. However, having a plan does not always determine the direction the company will go, the strategic plan is more like a map or GPS for the company. There are tons of other variables that drive a company. For instance, having great internal and external environments play a role on how the company will progress. The internal environment entails employees, management, the work culture/mission, and ethics. These components help make or break a company’s morale. If your company’s environment is unhealthy, then it is very possible the strategic plans that would be implemented improperly. The external environment is very important in a company as well, these are variables that occur outside the companies facilities that alter the company’s plans. Companies take their environments’ very seriously, there is a process call environmental scanning which, is an analysis of a company’s internal and external environments. Two companies that were recently researched using an environmental scan were Time Warner Cable and Nike. After an environmental scan it is possible to analyze the competitive advantage of Time Warner Cable and Nike. While, analyzing the competitive advantage, it is possible to see the value and effectiveness of Time Warner Cable and Nike’s business strategies. These two companies are...
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...usually starts with a vision statement that gives detail to potential opportunities of the organization. Managers must have the knowledge to understand the concept of choosing a strategy that can be beneficial to the business operation. Using the information provided by ABC, companies will be able to cut costs, review pricing policies and determine more profitable mix. This paper will evaluate how AOL- time warner can implement an ABC system, how the system can help maintain a competitive advantage, the impact the system has on online business sale. Company history Time Warner, as we know it today, is the result of many mergers and acquisitions. The company’s history can be traced back to 1922, when Warner Brothers was established. The company was later renamed to Warner Communications. Quantum Computer Services launched what would become America Online services 1985. In 1991 Quantum Computer Services changed its name to America Online, and went public in 1992. Meanwhile, in 1990, Time Incorporation merged with Warner Communications to form Time Warner. Then in 1996 Time Warner acquired Ted Turner’s Turner Broadcasting System. America Online acquired CompuServe in 1998...
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...interdependence, advertising, group behavior, competition, barriers to entry of firms, lack of uniformity, existence of price of rigidity, no unique pattern of pricing behavior, interdeterminateness of demand curve. In all honesty before this assignment I had only ever heard of the term monopoly, so this was definitely a learning experience for me. After reading up on oligopolies a few examples came to mind. For example, the music industry is currently being dominated by Universal Music Group, Sony, BMG, Warner and EMI Group. If we look closely at the travel industry is also another example of oligopoly with airlines like American Airlines, Delta Airlines and United Airlines double or even in some areas tripling the number of destinations travelled to over their smaller counterparts. Whenever we turn on the television we never stop to think that over 90% of the national media and new outlets that we view everyday are owned by six corporations - Walt Disney, Time Warner, CBS Corporation, Viacom, NBC Universal and Rupert Murdoch’s News Corporation. Another great example of an oligopoly that exist today is the operating systems that we use on our smartphones. In a survey conducted by the NPD Group in 2014, they found after interview 5000 Americans that 68 percent were Samsung and Apple devices. It is evident that the biggest disadvantage of oligopolistic market to a consumer is that it leaves the consumer without a choice. From the example of the travel industry in the US I...
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...MGMT E 2720 Mergers and Acquisitions Supplemental Case Questions 1. The New York Times a. Why is there so much family control in the newspaper business? b. How did the Sulzberger family manage to retain control on the NYT after it went public? c. How does the NYT dual class structure differ from the one used by Dow Jones, prior to its takeover by Rupert Murdoch? d. What explains the behavior of the NYT institutional shareholders – not just Morgan Stanley but also Private Capital Management, T Rowe Price and Vanguard? e. How should Arthur Sulzberger, Jr. respond to Morgan Stanley’s proposal? 2. Valuing AOL Merger a. The Merger was completed on January 11, 2001. Was it a good idea? Did AOL stockholders receive value? Did Time Warner shareholders receive value? b. Do you believe the new company will succeed? If so, how will value be created short and long term? c. What could go wrong with this “mega merger”? What are the most significant threats on the horizon for AOL Time Warner? d. Do you believe the company will achieve its aggressive goals for 2001? e. Any advice for AOL Time Warner execs in summer of 2001? 3. Upjohn Case a. Evaluate the strategic reasoning behind the merger. Will the merger effectively address the strategic alliances faced by Upjohn? b. How do you interpret the stock market reaction to the announced deal? What is the magnitude of performance improvement the...
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...Do Bank Mergers Create Shareholder Value? An Event Study Analysis Varini Sharma Introduction to Econometrics December 17, 2009 Professor Gary Krueger Macalester College I. Introduction Since the 1980s, the U.S. banking industry has experienced a large increase in the level of mergers and acquisitions. Between 1980 and 1998, approximately 8,000 bank mergers occurred, involving about $2.4 trillion in acquired assets that can be attributed to deregulation in the1980s and the removal of legal restrictions on intrastate and interstate banking (Rhoades, 2000). One basis for these mergers is the assumption that such consolidations lead to improvements in efficiency and profits amassed through increased market power, economies of scale, reduced earnings volatility, diversification, and other financial and operational synergies. While proponents of bank mergers argue that these gains are substantial, Coase (1937) tells us that tradeoffs exist between economies of scale (size) and ability to manage. In addition to the significant increase in mergers we have witnessed the collapse of countless financial institutions in the past 3 years due to bad lending practices. While the Coase theory applies to firms in general, how well does it apply to financial institutions? Additionally, has the increased size of financial institutions contributed to the financial crisis of 2008? This paper investigates the economic role of bank mergers in creating shareholder...
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...starting with travel agencies, over food and merchandising, to the accommodation of the parks’ visitors, Disney made sure that all possible revenue streams were channeled into the group without intermediary-related losses. Despite its precarious financial situation, Disney further extended its vertical reach by investing in the development of a new cable venture, The Disney Channel, launched in 1983, which allowed the exploitation of Disney content on the additional distribution platform cable television. Disney also decided to vertically integrate into syndication in order to exploit further revenues by licensing the individual film rights of Disney’s by now extensive television content library to independent television stations. The merger presented substantial benefits for both sides: Miramax gained guaranteed access to Disney’s national and international distribution network, and Disney could increase its content product diversity by securing content of the type that it lacked in its Disney, Touchstone and Hollywood Pictures output (Lyons, 2003). Through the Miramax acquisition Disney increased movie output from 18 films per year in 1988 to 68 new films in 1994. Summary of Disney’s Corporate Strategy Disney’s core competencies involve drawing upon new and classic entertainment brands through its film studios and content library, and exploiting them through ancillary assets. Animated films are an ideal product for the global media market. There are no royalties to pay...
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...MGMT E 2720 Mergers and Acquisitions Supplemental Case Questions 1. The New York Times a. Why is there so much family control in the newspaper business? b. How did the Sulzberger family manage to retain control on the NYT after it went public? c. How does the NYT dual class structure differ from the one used by Dow Jones, prior to its takeover by Rupert Murdoch? d. What explains the behavior of the NYT institutional shareholders – not just Morgan Stanley but also Private Capital Management, T Rowe Price and Vanguard? e. How should Arthur Sulzberger, Jr. respond to Morgan Stanley’s proposal? 2. Valuing AOL Merger a. The Merger was completed on January 11, 2001. Was it a good idea? Did AOL stockholders receive value? Did Time Warner shareholders receive value? b. Do you believe the new company will succeed? If so, how will value be created short and long term? c. What could go wrong with this “mega merger”? What are the most significant threats on the horizon for AOL Time Warner? d. Do you believe the company will achieve its aggressive goals for 2001? e. Any advice for AOL Time Warner execs in summer of 2001? 3. Upjohn Case a. Evaluate the strategic reasoning behind the merger. Will the merger effectively address the strategic alliances faced by Upjohn? b. How do you interpret the stock market reaction to the announced deal? What is the magnitude of performance improvement the...
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...Acquisition on DirecTV by AT&T Phillip C. Warren, Jr. Professor Daniel Goldsmith BUS 508 – Contemporary Business February 17, 2015 AT&T to Acquire DirecTV On May 18, 2014 Dallas, Texas based AT&T announced it had entered into a definite agreement where AT&T would acquire El Segundo, California based DirecTV in stock-and-cash transaction exceeding $67 billion. This agreement had been approved by both Board of Directors (AT&T, 2014). AT&T has a market value of approximately $185 billion (Informitv Mutliscreen Index, 2014) and is the second largest leader in the US communications by providing wireless, Wi-Fi, high speed internet, voice and cloud-based services (AT&T, 2014). DirecTV is a satellite service company, the second largest pay-television operator in the country and valued at $40 billion (Informitv Mutliscreen Index, 2014). Why was DirecTV Acquired by AT&T DirecTV has over 20 million television subscribers, an increase of over 4 million over eight years (Linderberger, 2014). But DirecTV does not provide broadband connections of their own. DirecTV must partner with other provides to provide there service to their customers (Cox, 2015). This puts DirecTV at a disadvantage against cable and telecomm networks to offer video on demand. This opportunity would allowed DirecTV to have the capability of providing broadband service to its customer and continue to attract new customers. AT&T is ranked number five in the US for...
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...(2012). Monopolistic competition markets are many sellers each supplying differentiated products, such as coffee shop in the central business district of a large city (Douglas, (2012). Oligopoly markets supply relatively few sellers each supply identical or differentiated products, such as automobiles, aircraft, and steel (Douglas, (2012). Monopoly markets have only one seller of a product or service, which has no direct substitutes, such as your local gas or electricity (Douglas, (2012). My understanding of oligopoly helped me understand an article I read this weekend about AT&T and DirecTV. AT&T Inc. agreed to buy DirecTV for $48.5 billion, or $95 per share, a move that gives telecommunications company a larger base of video subscribers and would increase its ability to compete against Comcast and Time Warner Cable, which agreed to a merger in February. Unlike Comcast and Time Warner Cable, which does not compete in the same territory, AT&T's U-verse,...
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...Mergers and acquisitions 1 Mergers and acquisitions The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity. In the most simplest way, Merger can be defined as how a "Marriage" is whereas an Acquisition is referred to as an "Adoption" of a child Acquisition An acquisition, also known as a takeover or a buyout, is the buying of one company (the ‘target’) by another. Consolidation is when two companies combine together to form a new company altogether. An acquisition may be private or public, depending on whether the acquiree or merging company is or isn't listed in public markets. An acquisition may be friendly or hostile. Whether a purchase is perceived as a friendly or hostile depends on how it is communicated to and received by the target company's board of directors, employees and shareholders. It is quite normal though for M&A deal communications to take place in a so called 'confidentiality bubble' whereby information flows are restricted due to confidentiality agreements (Harwood, 2005). In the case of a friendly transaction, the companies cooperate in negotiations; in the case of a hostile deal, the takeover target is unwilling to be bought or the target's board has no prior knowledge of...
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...AT&T Executive Summary AT&T provides telecommunication services to consumers, businesses and other entities. More specifically AT&T is classified as a diversified telecommunication services. AT&T has been around since 1876, when Alexander Graham Bell invented the telephone. (http://www.att.com/gen/investor-relations?pid=5711). Headquartered in Dallas, TX, AT&T is the largest landline and wireless service providers in America. They also provide Uverse, which is ultra-high speed internet and interactive high definition cable TV service. AT&T also provides wireless phone and data service, primarily to American customers, in over 200 countries. (http://www.att.com/gen/investor-relations?pid=5711). The US wireless market constitutes over 243M wireless subscribers. This represents a market penetration of 81%. The wireless market sells mobility of voice and data (video-media, download content and internet access). The wireless market is distributed between the following major competitors and distinguishing technology. AT&T- TDMA,GSM, UMTS/HSPDA Verizon Wireless – CDMA, EV-DO Sprint-Nextel- CDMA, EV-DO T-mobile - GSM, UMTS AT&T's Strategies vs. Competitors' Strategies AT&T's strategy is "bringing it all together for their customers, from revolutionary smartphones to next-generation TV services and sophisticated solutions for multi-national businesses." (http://www.att.com/gen/investor-relations?pid=5711). AT&T is a horizontally diversified, related businesses...
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