1 Time Warner Ctr. | New York, New York | 10019-016 | United States 1 Time Warner Ctr. | New York, New York | 10019-016 | United States Time Warner, Inc.
Time Warner, Inc.
Table of Contents
Porter’s Five Forces Analysis8
Strategic Business Units9
Conclusion & Recommendations10
The beginnings of Time Warner Inc. date back to 1922, when Henry Luce and Briton Haden founded Time Inc. Also during that time, brothers Harry, Abe, Jack and Sam Werner established Warner Bros. Entertainment. Today, Time and Warner Bros., along with Home Box Office, Inc. and Turner Broadcasting System, Inc. combine to make Time Warner one of today’s prominent media and entertainment conglomerates. Time Warner’s corporate strategy revolves around strategic mergers, acquisitions and corporate actions that result in creating cash considerations for the company. Thus, Time Warner is in a strong financial position today as they recorded revenues of $26,888 million in 2010 and $28,974 million in 2011 (Morningstar.com).
As a result of their strong financial performance, Time Warner has several strengths. Those include strong brand equity, diversified media operations and significant filmed entertainment content. Their weaknesses, however, include a concentration of revenue in the United States and ongoing litigations. Although Time Warner operates in Europe and the Asian Pacific and Middle Eastern regions, 71 percent of their business comes from inside of the Unites States (“Time Warner Inc. – Financial” 2). Therefore, Time Warner has many opportunities for expansion through strategic combinations. Other opportunities include the scope of the Direct Broadcast Satellite (DBS) Market, a growing focus on e-Commerce and a growing Pay TV Market. On the other hand, Time Warner is threatened by intensifying market competition, a rise in piracy, a stringent regulatory environment and declining DVD sales.
Time Warner’s strong position in the industry is reflected in their stock price. As of March 30, 2012, their stock was trading at a price of $37.75. Their stock price reached a five year low of $22.22 in early 2009 but following a series of separations, the stock price has steadily risen to today’s mark. Moving forward, Time Warner should leverage their current financial position and strong brand equity to expand in current and new foreign markets. If they are able to do so successfully they will be able to strengthen their overall market position while diversifying their earnings portfolio, which will ultimately help them decrease their business risk. Remote Environment
Overall, today’s economy is gathering momentum but its still not without its struggles. Earlier this year, Standard & Poor’s Economics estimated a 3.3 percent growth rate for the fourth quarter of 2011, which was a small increase of 1.8 percent for the full year of 2011 and an increase of 2.0 percent for 2012. In addition, competition from telecom companies offering TV services and other Internet service providers (ISPs) continues to eat into the market of the traditional pay TV providers (“S&P”). According to research conducted by SNL Kagan, by 2015, more than 12.1 million homes will have switched from traditional Pay TV providers to ISPs. This has had an impact on major cable and satellite companies as they reported a drop in video subscribers in the third quarter of 2011 as well as the first nine months. For instance, Time Warner Cable Inc. reported a net subscriber loss of 422,000 for the nine months ending September 2011 compared to the same time period last year (“S&P”). Operating Environment
Time Warner operates primarily in the Broadcasting and Cable...