Principles of Macroeconomics of the Time Warner - Case Study Example

Given that the promotional decline in price is only given to STARZ's current and future subscribers, and would not affect its big network businesses such as HBO and Showtime, it will be worthwhile to lower the price for the purpose of attracting subscribers. The decline in revenue from existing subscribers is deemed smaller than the potential revenue, given the larger market that it has to cater. Also, the popularity of STARZ, as it would be well advertised given the promotion is also worth the price.

Since the current revenue of STARZ is just .5% of the total revenue from the subscription (excluding advertisements and content), meaning there is a lot of room to grow in the current market, revenue can double or triple with the promotions. For Memo #4 The revenue growth rate figure for News Corp's Fox News is really admirable, standing at 67.8%, compared to last year. This is superior to CNN's 12.5%. However, the question is, 'is it enough to be a basis for Time Warner's acquisition of Fox News News Corp's revenue in 2002 was negative, although it was able to resurrect in 20003.

However, its 2003 net income figure remains to be the second-lowest among its competitors, only higher than Sony's $521 million dollars. These figures indicate the weak capability of News Corp to boast about their performance, thereby making acquisition prices limited at conservative prices. This means that in the case of Time Warner Inc decides to acquire the company, it might not have much difficulty with the price. Given that the revenue trend of Fox News is increasing, Time Warner Inc will do well by doing the acquisition as soon as possible, especially before the network gets to its peak when it will be much difficult for the company to acquire it.

Memo #5 The 2003 Time Warner Inc's Consolidated Statement of Operations reveals that subscription continues to the largest part of the business, and its revenue percentage is increasing, from 47% in 2001 to 50% in 2002 to almost 52% in 2003. These figures are derived from simply dividing the yearly revenue of subscription by the total revenue. The revenue from content is also increasing, from 25% in 2001 to almost 29% in 2003. On the other hand, revenue from advertising is declining. This trend suggests that businesses that generate subscription and content revenues are the one that should be focused on and improved.