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Chapter 13: Problem 22

The acquisitions of Time by Warner and \(\mathrm{ABC}\) by Walt Disney were examples of mergers. a) horizontal b) vertical c) conglomerate

Short Answer

Expert verified
The acquisitions of Time by Warner and ABC by Walt Disney were both examples of horizontal mergers, as they involved companies within the same industry and can be considered competitors in certain aspects of their businesses.

Step by step solution

01

Identify the types of companies involved in the mergers.

Time and Warner are both media companies, and ABC is a television network while Walt Disney is a media and entertainment conglomerate.
02

Understand the types of mergers.

There are three types of mergers: a) Horizontal Merger: A merger between two companies that are in the same industry, usually as competitors. b) Vertical Merger: A merger between two companies in the same industry that have a buyer-seller relationship. c) Conglomerate Merger: A merger between companies in different industries that are not related.
03

Determine the type of merger between Time and Warner.

Time and Warner are both media companies in the same industry, so their merger is a horizontal merger.
04

Determine the type of merger between ABC and Walt Disney.

As ABC is a television network and Walt Disney is a media and entertainment conglomerate, their merger is also considered a horizontal merger as they are both in the media industry and may be considered competitors in certain aspects of their businesses.
05

Answer the exercise.

a) Time and Warner: Horizontal merger b) ABC and Walt Disney: Horizontal merger

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