University of Management Economics: Viacom Acquisition Analysis Report

This report provides a comprehensive analysis of the proposed acquisition of Viacom by Time Warner. It begins by assessing the financial soundness of the acquisition, highlighting the benefits such as market access and skilled manpower. The report then addresses the concerns raised during the 2015 merger between Comcast and Time Warner, including competition, customer experience, and market control. It further examines government concerns regarding diminished competition and ways the merger could increase value for customers and shareholders. The report identifies potential merger targets, such as Charter Communications, Cox Communications, and Dish Networks, and discusses the advantages each would bring. It also explores the impact of cord-cutting on cable television services and strategic moves Time Warner could employ to counter this trend. Finally, the report assesses the industry's concentration level based on Department of Justice guidelines and notes the changes in the industry since 2015, including the potential impact of strategic partnerships. References are also provided.

Running Head: Advice to the Board 1
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Subject : Management
Couse Title : Managerial Economics
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Running Head: Advice to the Board 2
MEMO 8
Viability towards acquisition of Viacom
Acquisition of Viacom is a financially sound move as it will guarantee ready market for Time
Warner since the latter is a well-known firm in the industry. Time Warner will not incur huge marketing
costs to make the programs famous or to acquire new market niches. Moreover, Time warner has a well-
known policy that encourages merging and acquisition as evident in 2014 with Comcast.
Acquisition move by Time Warner is a good move as it will benefit from the skilled manpower
from Viacom. Aside from the human resources, Time Warner will benefit from the already installed
infrastructure hence limiting the chances of installation failures (Čirjevskis, 2017). Finally, the firm will be
able to accurately budget for the initiative since the cost is possible to determine on a one time basis as
opposed to a situation where the firm has to build the program from scratch.
MEMO 9
Eminent concerns that were raised with the proposed 2015 merger between Comcast and Time
Warner
Several issues had to be ironed out during negotiation such as the fact that Comcast had affiliates in
several countries, desire to improve innovation, and reduce the cost of production. Similarly, the firms were
concerned about the issue of customer competition and market control especially in the live video
streaming (de Andrade, 2020; Hentschke, et al., 2017). Additionally, there was the issue of customer
experience on the wake of a concern that the total revenue in the industry was on a downward trend and
experts postulated that the trend would continue over the next five years.

Running Head: Advice to the Board 3
Ways in which the government was concerned that competition would diminish
The government was concerned that the merger deal would bar other firms from getting into the
market for streaming video. This coupled with the fact that Comcast was the worst service provider in the
region; there was concern that customers would not get value for their money.
Ways in which the merger would increase value to customers and shareholders
Customers would be guaranteed high-speed data from the merger company as well as improved
telephone services. One of the main objectives of the initiative is to improve customer experience.
Total revenue for the company would increase significantly over the years as a result of the merger
initiatives. This is because of the large customer base as well as combination of resources and marketing
tools.
A list of two potential targets for merger
1. Charter Communications:
2. Cox Communications:
3. Dish Networks:
Advantages that charter communications would bring to Time Warner
Charter communications with a large customer-base would ensure that Time Warner realize higher
returns on investment.
Advantages that cox communications would bring to Time Warner
Cox has a large number of programs with many viewers across the globe.
Advantages that Dish Networks would bring to Time Warner

Running Head: Advice to the Board 4
Dish Network services are offered at relatively lower cots making it to have a wider customer base
hence the firm would receive higher returns. This, as Zeeman and Benneworth (2017), recommends, is one
of the ways of wining new customers of medium incomes in the society.
MEMO 12
Effect of the decision by cable customers to “cut the cord” and sell directly to consumers on the
demand for cable television services:
Many customers will downgrade their video packages and supplement their watching with online
videos services or OTT support care.
Does the decision to sell OTT services directly to customers by some of the firms have any impact
on the decisions of the other firms?
Yes, if the firms decide to sell OTT services to customers directly, other firms in the market will
also look for ways to counter the move hence receive lower profit margins. According to Evens and
Donders (2016); Sapkota (2019), consumers always opt for suppliers who charge lower rates and tailor
products to their specific needs.
Strategic moves that Time Warner could put in place to counter the action by cable customers to
“cut the cord”
Invest in research and development to come up with unique services that are dissimilar with the
services of the firms that have decided to cut the cord.
MEMO 13
1. Concentration level of the industry based on the Department of Justice guidelines
As documented in appendix 4, a combination of four cable companies and two satellite providers,
two phone service providers and four internet service providers does not show that the market is too much
flooded.

Running Head: Advice to the Board 5
2. The manner of change that has been witnessed in the industry since the 2015 survey
There have been many mergers and acquisition in the industry ever since 2015.
3. It is true that strategic partnership with Dish Network would create a significant change in
concentration in the Metro area. This is because Dish Network has a direct broadcast satellite service as
well as an Over the Top service provision capability –a combination that would drive many firms out of the
industry hence lower concentration.
References

Running Head: Advice to the Board 6
Čirjevskis, A. (2017). Acquisition based dynamic capabilities and reinvention of business models: bridging
two perspectives together. Entrepreneurship and Sustainability Issues, 4(4), 516-525.
de Andrade, D. C. T. (2020). BUSINESS INNOVATION AS PROFIT APPROPRIATION STRATEGY
FROM MERGERS AND ACQUISITION. Revista Livre de Sustentabilidade e Empreendedorismo,
5(1), 212-231.
Evens, T., & Donders, K. (2016). Mergers and acquisitions in TV broadcasting and distribution: Challenges
for competition, industrial and media policy. Telematics and Informatics, 33(2), 674-682.
Hentschke, G. C., Parthenon-EY, E., Young, L. L. P., Jacobs, B. C., Jacobs, L. A., & Ladd, H. (2017).
Mergers in Higher Education: A proactive strategy to a better future?.
Sapkota, R. (2019). ISSUES AND ANALYSIS OF LEADERSHIP, STRATEGY, BEHAVIOR, AND
ACCOUNTING OF MERGERS AND ACQUISITIONS: A CASE STUDY OF A MERGER OF
TWO MEGA-CORPORATIONS. International Journal of Organizational Innovation (Online),
12(2), 180-191.
Zeeman, N., & Benneworth, P. (2017). Globalisation, mergers and ‘inadvertent multi-campus universities’:
reflections from Wales. Tertiary education and management, 23(1), 41-52.