Finance Article Review
By
Presented to
Financial Strategies
MBA 612
July 18, 2005
Article Citation
The title of the article that I am review is "Cable Systems' New Weapon In Phone Battle: Going Private" by Peter Grant. It appeared in the Wall Street Journal on June 21, 2005, section B1. This article can be found online at: http://online.wsj.com/article/0,,SB111930905696564573,00.html
Main Issue of Article
This article addresses the strategy of publicly held cable companies being able to better compete with the telephone companies by going to privately held ownership. The author sites that three of the top eight cable companies have either already taken their companies private or have announced plans to buy the outstanding publicly traded shares.
The three companies that the article talks about, Cox Communications, Cablevision Systems and Insight Communications, are all companies that are poised to take telephone customers away from regional bell companies in addition to fending off a video push from those same telephone companies.
In interviews with executives from these companies, the common theme for going private seems to be to get away from the scrutiny of analyst and investor expectations on immediate returns in favor of being able to position their companies for longer term growth and to be better positioned against competition. Another reason given was the anemic stock performance of the sector over the last couple of years along with the increased pressure from investors to increase prices that consumers pay in the face of increased competition.
In the end, the companies that have gone private or announced plans to go private, are companies tha ...