Assignments:
- Graph Skills (p.203): #1 & 2
- Horizontal Merger and Vertical Merger (p.206): #1 & 2
- Section 3 Assessment (p.207): #2, 3a, 3b, 4, 5a, 5b, 6, 7a, 7b, 8, 9a, 9b, 10a, 10b, 10c
Think about how corporations are different from sole proprietorship, partnership and franchise.
Choose to Merge:
Imagine that you are the chief executive officer of a major media group. The corporation’s holdings include two major city newspapers and six community newspapers in different cities. The firm has been prospering for many years, but for the last two years, both profits and circulation have declined. Market analysis suggests that part of the reason is reduced advertising revenue caused by competition from the Internet. At its last meeting, the board of directors addressed the issue and has directed you to investigate a possible merger that would strengthen the firm’s position in the marketplace. After some research, your staff has identified the three companies listed below as possible merger candidates.
Read the descriptions of each company and decide which would be the best partner to strengthen
your firm. On a separate piece of paper, write a recommendation to the board. As part of your
proposal, include a response to these questions:
Company 2: Golden Broadcasting: This broadcast company owns four local television broadcast stations and six radio stations in cities in your area. The company has been growing in recent years and two of their radio stations were purchased in the last six months.
Company 3: Cramer News Group: This firm owns a major city newspaper and three community newspapers in a different region of the country. The city newspaper has a strong reputation for insightful investigative reporting. Like your own firm, this newspaper group has always been profitable, but it too has seen a drop-off in advertising revenue.
Imagine that you are the chief executive officer of a major media group. The corporation’s holdings include two major city newspapers and six community newspapers in different cities. The firm has been prospering for many years, but for the last two years, both profits and circulation have declined. Market analysis suggests that part of the reason is reduced advertising revenue caused by competition from the Internet. At its last meeting, the board of directors addressed the issue and has directed you to investigate a possible merger that would strengthen the firm’s position in the marketplace. After some research, your staff has identified the three companies listed below as possible merger candidates.
Read the descriptions of each company and decide which would be the best partner to strengthen
your firm. On a separate piece of paper, write a recommendation to the board. As part of your
proposal, include a response to these questions:
- Which merger partner would you recommend?
- What kind of merger would it represent—vertical or horizontal?
- How would the merger benefit your company?
- Why would you not recommend the other companies for merger?
Company 2: Golden Broadcasting: This broadcast company owns four local television broadcast stations and six radio stations in cities in your area. The company has been growing in recent years and two of their radio stations were purchased in the last six months.
Company 3: Cramer News Group: This firm owns a major city newspaper and three community newspapers in a different region of the country. The city newspaper has a strong reputation for insightful investigative reporting. Like your own firm, this newspaper group has always been profitable, but it too has seen a drop-off in advertising revenue.
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