Did the sale of Essence to Time make sense strategically?

In this case study assignment, you will analyze the Edward Lewis Essence Magazine case study. The case study pushes us to think about synergies in corporate diversification – and flashes forward into digital strategy. This course uses case studies because of the managerial lesson that transcends time rather than “newness.”

1. Read the case study twice. Once to get a broad understanding of the issues. The second time for evidence to help understand Porter’s Three Tests.

2. Write a 1-page response to the following:

Did the sale of Essence to Time make sense strategically?

Industry Attractiveness Test. Explain whether the Five Forces in the magazine industry improve because of the deal. In the interest of page space, you can focus on one or two forces that you think will be the most impacted by the deal.

Cost of Entry Test. Does the revenue multiple for the deal seem unrealistic? Will the deal bring additional costs that prevent Time from recouping the purchase price?

Better Off Test. Identify possible resource transfer or resource-sharing synergies. Are there any barriers preventing value creation by combining the two companies?

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