Analysis of the corporate decisions taken in the framework of the case “Paramount Communications, Inc. v. Time Incorporated” (1989) from a strategic perspective

Abstract

“Paramount Communications, Inc. v. Time Incorporated” is a paradigmatic case which falls within the field of study of Mergers and Acquisitions, and whose judicial decision marked a milestone in American jurisprudence. This paper analyzes, from a strategic approach, the corporate decisions that were made in the framework of the facts that are circumscribed in this case. Firstly, it offers both a review of the sector and the company from an economic perspective, and an abbreviated description of the most relevant facts that led to the case coming to Court. Secondly, an examination is made of the different strategic decisions taken by the companies concerned. In this regard, it analyzes Time’s decision to enter the entertainment industry, Paramount’s insistent offer to acquire all of the outstanding shares of Time, Time’s continued refusal to be acquired by Paramount, and Time’s strategic shift from a stock-for-stock merger with Warner into an all-cash and securities acquisitions of Warner.