SUBJECT: Managerial Economics and Business Strategy

INSTRUCTIONS: Read the case about Time Warner Cable using the link I provided below. Put yourself in the shoes of decision makers at the time of their decisionsJuly 2016 in this caserather than at the time you read the case. Time Warner Cable is a timeless case that was written especially for Managerial Economics and Business Strategy. Regardless of whether you've covered a single chapter or every chapter in the text, the case provides an opportunity to apply tools from managerial economics to a real-world business situation. The case includes a plethora of issues and may be used in a variety of ways to hone your decision-making skills.

The case includes a variety of memos that permit you to apply concepts on a chapter-by-chapter basis. Read the following memo given below and provide the information requested. As you answer, APPLY concepts from Managerial Economics and Business Strategy.

We hope you enjoy the case. Remember that an important component of any case exercise is to use the information provided along with your knowledge of managerial economics and business strategy to identify key issues and to guide your recommendations and decisions. Consider this a practice run for when you leave the classroom and enter the business world.

PDF file of the Case: Time Warner Cable: https://drive.google.com/file/d/10pqMPIdX7isEreAblpCQh-SjC2SjAhaF/view?usp=sharing

REMINDER: Please, NO PLAGIAR. And kindly, do not give too short answers. AT LEAST 1 page will do, because this is a case study. Thank you so much.

MEMO 10

To: Director, Content Acquisition

From: Chief Operating Officer

Re: Retransmission Negotiation

We are in continued negotiations with one of the major broadcast network affiliates on the West Coast over retransmission fees and have not been able to reach an agreement. The current contract ends on August 31 of this year. The current retransmission fee is $1 per subscriber per month.

The network affiliate is demanding $1.25 per month and has cited the fact that it has just picked up rights to broadcast the NFL games for the local franchise. We have counter-offered $1.05 per subscriber, but this was immediately rejected.

We currently have 810,000 cable subscribers in the affiliate's market, which makes up about 52 percent of all households in the area. Other households have either cut the cord or are using a competing service (DirecTV, Dish Network, or Verizon). All of our competitors in the market have contracts with the network affiliate through the end of next year.

Based on past experience in other markets, our analysts estimate that losing access to the network affiliate will cost us 3 percent of our customer base within the first week, and another 2 percent if the dispute lasts a month. The network affiliate will lose some revenue as well since half of its viewers will lose access to its programming.

Should we accept the $1.25 monthly fee? What should our negotiating strategy be, and how do you anticipate the affiliate will respond?