Paramount Case Analysis
1. WHY IS PARAMOUNT A TAKEOVER TARGET?
Paramount is a potential merger target to Viacom and QVC for a few key reasons outlined below:
Paramount & Viacom:
(1) Synergy creation: The businesses of both companies are famous and highly complementary to each other.
(2) Cost reduction: Paramount & Viacom both have economies of scale and are doing business in a similar industry.
(3) Addition of enhanced and complementary distribution capabilities, which will significantly increase revenue.
(4) Better positioning: Will allow Viacom to gain a stronger competitive advantage against its peers. The film industry is highly centralized and a takeover can help Viacom-Paramount reduce their overall competition, thus making them more profitable as a whole.
Paramount & QVC:
(1) Barry Diller: Was an ex-CEO of Paramount, who would make the company more content-driven), he was expected to increase Paramount’s film production with lower costs.
(2) New Businesses could be established under expectation, such as TV network and channels, to increase revenue for the combined firm .
General:
(1) Reputation: Before the 1990s, Paramount had delivered series of successful programmes, such as Cheers, Star Trek, Happy Days and etc. Those successful experiences were an important part in forming Paramount and its overall reputation.
Therefore, Paramount is a strongly attractive takeover candidate for both Viacom and QVC for these reasons.
2. WHICH OF THE TWO FIRMS – VIACOM OR QVC – WOULD MAKE A BETTER FIT WITH PARAMOUNT?
Upon considering the situation at hand, we feel that Viacom would make a better fit with Paramount.
Other than the reasons mentioned in Q1, we have to consider that a Paramount-QVC combination potentially implies asset liquidation of Paramount and abandonment of intangible (intellectual) assets, which are the core asset of Paramount. We feel that Paramount-Viacom will be a better combination since both parties are enhancing their advantages instead
Paramount is a potential merger target to Viacom and QVC for a few key reasons outlined below:
Paramount & Viacom:
(1) Synergy creation: The businesses of both companies are famous and highly complementary to each other.
(2) Cost reduction: Paramount & Viacom both have economies of scale and are doing business in a similar industry.
(3) Addition of enhanced and complementary distribution capabilities, which will significantly increase revenue.
(4) Better positioning: Will allow Viacom to gain a stronger competitive advantage against its peers. The film industry is highly centralized and a takeover can help Viacom-Paramount reduce their overall competition, thus making them more profitable as a whole.
Paramount & QVC:
(1) Barry Diller: Was an ex-CEO of Paramount, who would make the company more content-driven), he was expected to increase Paramount’s film production with lower costs.
(2) New Businesses could be established under expectation, such as TV network and channels, to increase revenue for the combined firm .
General:
(1) Reputation: Before the 1990s, Paramount had delivered series of successful programmes, such as Cheers, Star Trek, Happy Days and etc. Those successful experiences were an important part in forming Paramount and its overall reputation.
Therefore, Paramount is a strongly attractive takeover candidate for both Viacom and QVC for these reasons.
2. WHICH OF THE TWO FIRMS – VIACOM OR QVC – WOULD MAKE A BETTER FIT WITH PARAMOUNT?
Upon considering the situation at hand, we feel that Viacom would make a better fit with Paramount.
Other than the reasons mentioned in Q1, we have to consider that a Paramount-QVC combination potentially implies asset liquidation of Paramount and abandonment of intangible (intellectual) assets, which are the core asset of Paramount. We feel that Paramount-Viacom will be a better combination since both parties are enhancing their advantages instead