Telewizjia Wisla Harvard Case Solution & Analysis

Venture Capital

DBG is a capital venture of Eastern Europe, which is very much interested to invest in TVW under the following conditions.

  • DBG almost takeover TVW and controlling percentage of company will restrictive to small percentage of shareholding
  • DBG would hire Szczerba and  new management experts to grow and achieve  company’s target
  • Szczerba would have a right to invest sufficient amount to get ownership of 4% to 25% of the company
  • DBG will invest only if  TVW offers  that price of share that yield return on investment to  be at least 30%

Q1. What is the nature of the business opportunity?

The business opportunities that will give economic benefits are listed below:

  •  Only  two  companies in the entire market have private broadcasting rights
  • Private broadcasters allow on air ads during the programs
  • Private broadcasters can raise finance from external market and foreign investors
  • About more than 12.5 million viewership market
  • Good innovation in on air programs can increase the company’s profitability
  •  Availability of huge market
  • Company can enter into the foreign market through partnership with international broadcasters

Q.2   How can Ms. Hurley achieve her goals in the face of problems with the current majority owners of the company? What other problems does face by TVW?

Firstly, Ms. Hurley needs to find investors for raising fund so that the company will not bankrupt. She should get back to Szczerba and involve in making offer plan that will be offered by investors. Moreover, she should hire expert management that have past experience and excellent expertise of how to run a media company.

The other problems face by TVW is listed below;

  • Company has shortage of fund
  • To reduce operating expenses
  • Increase revenue
  • Manage funds  efficiently

Q.3    What is root cause of the problems TVW faces? What is the scarce resource?

Revenue of TVW is not increasing with the increase in percentage of expenses; which is resulting in net loss for the company. As the company is in initial stage so its operating cost is very high. TVW started business with low investment and because of this reason TVW needs to reinvest, but they did not have sufficient cash to reinvest. Fund and cash are scarce resources for TVW. Key skill experts and managers are also available in TVW.

Q. 4  There are currently two potential investors, Bertelsmann Group and a venture capital         firm. Which one would you prefer? Why? How should Ms. Hurley seek to raise $7.4 million?

I am in favor to raise capital through venture capital firm. It would be viable for company’s performance point of view because of the following beneficial reasons.

  • Venture capital firm would back Szczerba as a President, his core skills and capability that would enhance the value of the company. Szczerba will get new chances to company to increase profitability.
  • Venture capital firm must fulfill all regional requirements and government enacted legislation provisions for Television Media Industry, whereas if the company went to raise fund form Bertelsmann Group so control activity of percentage would restrict to 44% and this option will contradict with the government legislative provision.
  • Bertelsmann Group does not have experienced and excellent abilities in the field of sales and marketing.

Based on the current performance of Cash Flow statement and Balance Sheet; it is estimated that the current value would not be more than 100 million, so Hurley should sell 7.4% of total value to DBG capital venture and can raise 7.4% million. If the company moves forward with above plan so they can fulfill the mandatory requirement of holding shares of council.....................................

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