Time Warner: The Impacts of Acquiring Fox News

1591 Words4 Pages

Abstract

The purpose of this case study was to examine the impact of acquiring Fox News on Time Warner, Inc. The multi-faceted Time Warner merged with AOL in 2001, created a loss in value to both companies. Time Warner has sought after ways to either increase overall revenue through divesting portions of its corporation or acquire new companies to bolster earnings. This paper explores the impact created by the acquisition of Fox News by Time Warner to its news network line-up. The impact of complementaries, creations of anti-trusts, and the actually of a synergy taking place between CNN and Fox News.

Introduction

In January 2000, Time Warner, Inc. (TW) announced its plans to merge with America Online (AOL) and upon completion in 2001, it had become the largest merger in U.S. corporate history. AOL had a pre-merger value of $163 billion and Time Warner had a preannouncement value of $100 billion, in 2001, the value of the combined firm was stated at $165 billion. While many saw an opportunity to create a synergy out of the two media giants, the overall firm saw little success as a combined entity and has since faced several challenges. Michael R. Baye addresses several issues for discussion concerning the merger in his textbook Managerial Economics and Business Strategy, through the usage of hypothetical memos issued within Time Warner. Memo 4 discusses the possible acquisition of Fox News to increase revenues, bolster subscriptions, and expand their international market. The purpose of this paper is to address the specific problems Time Warner faces by acquiring Fox News and to provide strategic moves that best capitalize on Time Warner's current situation.

Methodology

Qualitative and case study research were t...

... middle of paper ...

...sing revenues to bolster earnings. By focusing on retaining its viewers, building viewer loyalty, and increases advertising revenues, TW would be able to continue to successfully compete against Fox News without the need to acquire the actual network.

References

Baye, Michael R. (2005). Managerial Economics and Business Strategy, Fifth Edition. Boston, MA,: McGraw-Hill.

CNN. (2006, December 13). In Wikipedia, The Free Encyclopedia. Retrieved December 12, 2006, from http://en.wikipedia.org/w/index.php?title=CNN&oldid=94093631

Fox News Channel. (2006, December 14). In Wikipedia, The Free Encyclopedia. December 12, 2006, from http://en.wikipedia.org/w/index.php?title=Fox_News_Channel&oldid=94231890

Synergy. (2006, December 8). In Wikipedia, The Free Encyclopedia. Retrieved December 12, 2006, from http://en.wikipedia.org/w/index.php?title=Synergy&oldid=93013797

Open Document