Telewizja Wisla Harvard Case Solution & Analysis

Telewizja Wisla Case Study Solution 

To: Ms Harley


Date: July 11th, 2017

Subject: Analysis and Recommendation on Telewizja Wisla

INTRODUCTION: The following memo states the details regarding the most important problems being faced by Telewizja Wisla (TVW), and the opportunity which has been provided in order to solve those problems. It also includes the assessment of the consequences of the debt and investments which it receives its fund to run its future financial and operations performance along with the appropriate recommendations.

OPPORTUNITY:Looking at the future financial performance of Telewizja Wisla’s Income Statement and Balance Sheet, the newly Telewizja Wisla has expected to start making profits starting from the year 1998 to 2001 with having higher profits each year. Since the company had recently started its business in the year 1994, it had been facing certain problems regarding financing and the average view by people on its channel which reduced its revenues and opportunity to get investors.

The company was facing dire financial crises in the year 1996 as it required urgent liquidity money to continue its operation. Around 5 million PLN (The US $2 million) was being provided by one of its investor Realbud in May, but the company required more finances to run its operation. TVW started to look for another substantial partner who would invest in its business, or the company would run out of cash and are forced to shut down its business.

Telewizja Wisla gained an opportunity when it came across two of the investors who were willing to invest in TVW. Out of the investors, Telewizja Wisla had an option to select only one of the investors. One of the investors was a German media company by the name of Bertelsmann who had a strong financial condition and anextensive programming library. The other investor who was willing to invest was Development Capital Eastern Europe, Ltd (“DBG”) which was owned by James O’Neill who was a student of Harvard Business School. Both of these investors positioned as a good opportunity for TVW, but those investments also had some disadvantage for TVW.

Telewizja Wisla Harvard Case Solution & Analysis

Opportunity from Polish TV market: In the year 1996 there were only two private terrestrial broadcasters which are the TVW and Polsat. The President of the TVP (Public Television of Poland) announced that the output would increase by 2-3% and content was over 70% domestic production. Around 97% of the people in Poland had television where 85% of them watch television for an average 4.5 hours a day. This shows an opportunity that would increase the views on TVW broadcasts. TVW covered around the entire southern Poland and also had an opportunity to reach to around 8 million of Poland’s population by developing carriage arrangement through cable operators.

Poland Economy: The challenges which were faced by TVW from Poland’s Economy is that it was required to pay off the licensing fee for broadcasting and production facilities. The survival of the company relied on proper marketing, promotion and sales through good advertising which it required at least 12% on the ad market share to reach the breakeven of one year. Looking at the economy ofPoland, the population, GDP has been increasing, and the Unemployment and CPI have been decreasing in 1996 which shows a good economic performance. This shows a significant opportunity for TVW that it will have success in the future.

Achieving Goals in the face of problems:Ms Hurley faced difficulties regarding the new current owners and the senior management. Since the new senior management had no experience regarding the private televisions. While the new owners Potasz and Sztorc being Russian did not spoke English which in turn caused difficulty in gaining new foreign investors.  Without Szczerba (founder of TVW) the company lacked leadership. So for solving this issue, Hurley could look for investors who would send its own management team to run the business and its operation.

Other Problems:The opportunity which was provided to TVW on which two investors were willing to invest on TVW presented some challenges for the company. The first investor was German media company Bertelsmann who could jeopardise the TVW ability to secure in broadcasting and for several transmission sites in another region. The reason as it might increase its influence of German in the southern Poland Media

The other investor was the DBG Development Capital Eastern Europe, LTD who issued a proposal to TVW. The DBG were willing to invest in the business, but in return, it would buy out one of TVW investor Efekt’s position and also diluting Realbud’s share on TVW. Also, DBG would recruit its choice of senior management to run the business and which would focus on the company to grow. Licensing was of another problem since TVW was only given southern Poland Licensing for broadcasting while its rival Polsat was given with regional licensing.

Root Cause of Problem:The main root cause of theproblem for TVW as it was facing financial difficulties which posed challenges to run its operation. The primary and other banks of Poland along with the investor Realbud who were no longer willing to take shares of TVW. This causes some financial issues for TVW in which it started to look for other investors who would be willing to invest in the business.

RECOMMENDATION:After analysing the case and looking at TVW past experience along with the new owners, the best investor for the company to select would beDBG Development Capital Eastern Europe, LTD. The company is willing to invest 18.5 million but in return would send its own chosen senior management to the run business and also it will take the Efket’s position along with diluting Realbud’s share.

The reason why DBG is worth choosing is that it is believed that the current senior management and the current owner lacks the experience for running a television broadcasting company. With DBG supplying its own management team may improve the business condition. Also if selecting the German media company Bertelsmann for investment, it would prove to be difficult for gaining acceptance from the council for conducting broadcasting in other regions. The owner of DBG is a student of Harvard Business School which could also provide with a good suggestion on the success of the TVW..................

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