#1 STOPPED AT THE 3-YARD LINE

Scenario: The client is a manufacturer of sports equipment and supplies, with greater than $550 million / year in sales. They have just purchased a small, struggling sports magazine with roughly $1.5 million / year in sales for the purpose of gaining access to its subscriber list for direct marketing purposes. A recent court decision, however, has forbidden the use of the subscriber list for such a purpose.

The CEO of the client has asked for help deciding what to do with this company. What avenues would you pursue, what information would you look for, and what suggestions would you make?

Additional Information:

· The client currently sells primarily to retail chains. They are trying to start a direct marketing business, because margins are roughly twice what they are selling retail businesses.
· The magazine sells primarily through subscriptions, with a subscription list of roughly 35,000.

Case Discussion:

The student can take this case in several directions. S/he can discuss attempts to try to turn the magazine company around through examining strategic options or through focusing on the operations of the company. S/he can assess the possibilities for disposing of the company. S/he may discuss the synergies that may still exist, such as the strength of the free advertising and the implications of the purchase upon the magazine’s business (revenue from other advertising may suffer). S/he may also come up with creative suggestions for how to use the new company in a slightly different way, for example, to use the facilities for production of internal or market communications, or using the magazine to conduct market research.
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