In 2018, CBS Corporation submitted a below market bid to acquire Viacom. The rationale for the below market price bid stems from CBS’s due diligence of Viacom and numerous assumptions made by the Viacom management team about Viacom’s business prospects. In short, the CBS due diligence team discounted those statements made about Viacom’s business prospects by discounting the price offered. In addition to the perceived discounted price offered by CBS, there is a growing discord over who would run the combined CBS/Viacom entity. Shari Redstone of National Amusements is a majority shareholder in both CBS and Viacom. She has asked for CBS to acquire Viacom, but she believes that it is in the best interest of the new entity to be run by the current CBS CEO (Leslie Moonevs) and the number two position (COO and President) should be given to current Viacom CEO (Robert Bakish). However, CBS’s special advisory board believes that the current COO and President of CBS (Joe Ianniello) should have the number two position to ensure a smooth transition and continuity of operations. In response to the offer, Viacom’s advisory board has asked that CBS raise its bid by $2.8 billion. Company Backgrounds Viacom Inc . offers global media brands that create television programs, motion pictures, short-form content, applications, games, consumer products, social media experiences and other entertainment content. As of September 30, 2016, the Company offered its services for audiences in more than 180 countries. The Company operates through two segments: Media Networks and Filmed Entertainment. The Media Networks segment creates, acquires and distributes programming and other content for audiences The Media Networks segment provides entertainment content and related branded products for advertisers, content distributors and retailers. The Filmed Entertainment segment produces, finances, acquires and distributes motion pictures, television programming and other entertainment content under the Paramount Pictures, Paramount Vantage, Paramount Classics, Paramount Animation, Insurge Pictures, Nickelodeon Movies, MTV Films and Paramount Television brands. CBS Corporation is a mass media company. The Company operates through four segments: Entertainment, Cable Networks, Publishing, Local Media. The Entertainment segment comprises the CBS TV Network; CBS TV Studios; CBS Studios International and CBS TV Distribution; CBS Interactive; CBS Films; and the Company's digital streaming services, CBS All Access and CBSN. The Cable Networks segment comprises Showtime Networks, which operates its subscription program services, Showtime, The Movie Channel, and Flix. The Publishing segment comprises Simon & Schuster, which publishes and distributes consumer books under imprints such as Simon & Schuster, Pocket Books, Scribner and Gallery Books. The Local Media segment comprises CBS TV Stations, it owns 30 broadcast TV stations; and CBS Local Digital Media. Its businesses span the media and entertainment industries, including the CBS TV Network, cable networks and content production and distribution.
Given the information from contained in the question and your limited understanding of CBS and Viacom, discuss four problems that may occur as a result of this acquisition based on the information contained in the question
In: Operations Management
Q1: According to the article, what aspects of their IPO processes have benefited Warner Music and ZoomInfo and why?
Q2: How have Warner Music and ZoomInfo weathered the fallout from the Covid-19 shutdowns?
Q3: Why do you think Albertsons Cos. and Vroom Inc. might be able to go public in this market environment but Airbnb Inc.'s IPO is likely to be delayed?
DJ Warner Music, ZoomInfo Poised to Boost IPO Market -- 2nd Update
By Corrie Driebusch
Two big IPOs are set to reinvigorate the market for new issues this week, as the rebound in stocks encourages companies forced to the sidelines by the coronavirus pandemic to revive listing plans.
Warner Music Group Corp. and ZoomInfo Technologies Inc. plan to list their shares Wednesday and Thursday, respectively, potentially raising more than $2.5 billion combined. Together with three other companies expecting to make their debuts, the listings would make the week the year's biggest for U.S.-listed initial public offerings, according to Dealogic.
The burst of activity comes after months of relative quiet, with potential issuers scared away by the pandemic and the ensuing economic damage and financial turmoil. With shutdowns beginning to lift, and the benchmark S&P 500 index now down less than 5% on the year, issuers are starting to return. Should this week's crop of IPOs fare well, a host of companies are likely to follow in the coming months, according to bankers.
Grocery giant Albertsons Cos., for example, plans to launch a roadshow to market its shares as early as this month, while online used-car seller Vroom Inc. did so this week.
Some debuts that were to take place in 2020 will likely remain on ice. The pandemic and the dramatic blow it has delivered to the travel and hospitality industry will likely delay Airbnb Inc.'s highly anticipated IPO until at least 2021, according to people familiar with the matter.
And even with the pickup, the IPO market is unlikely to return any time soon to the robust health it enjoyed early last year before stumbling, as investors punished companies with big losses. By the end of December, shares of companies that went public in the U.S. in 2019 were on average up less than the S&P 500, according to Dealogic -- an inversion of what's typical.
Warner Music is targeting a range of $23 to $26 for its shares, which would value the record company at $11.7 billion to $13.3 billion and make it the biggest IPO of the year. The company expects to price the stock in the upper half of that range, according to people familiar with the matter. Warner Music delayed its meeting to set an IPO price to Wednesday morning from Tuesday evening in deference to a move by record labels to suspend work Tuesday in support of the protests over the death of George Floyd, one of the people said.
ZoomInfo, a marketing-data company, plans to sell 44.5 million shares at between $19 and $20 each, a range it boosted Tuesday morning amid strong demand. At the midpoint, the company would raise more than $850 million, making it the biggest technology IPO of 2020.
The other IPOs on deck this week are those of biopharmaceutical companies Applied Molecular Transport Inc. and Pliant Therapeutics Inc. and payment processor Shift4 Payments LLC.
The success of Warner Music and ZoomInfo, measured by how much demand there is for the shares both before and after they start trading, could hinge on steps taken in the months leading up to their official launches.
Executives at both companies were able to speak with potential investors in so-called testing-the-waters meetings before travel came to a near halt. That gave the investors more comfort to put in orders for shares, some of them said, even though they were deprived of the in-person roadshow meetings that precede new listings in normal times. Instead, Warner Music and ZoomInfo executives conducted virtual roadshows, trying through video chats to persuade investors to buy their stock.
Also key for drumming up demand: Both companies worked to secure a significant chunk of their IPO proceeds ahead of time. Warner Music has discussed investments totaling more than $1 billion of its fundraising goal with institutions as well as with the Chinese internet company Tencent Holdings Ltd., The Wall Street Journal reported last week. BlackRock Inc., Dragoneer Investment Group and Fidelity are named as so-called anchor investors planning to buy up to $100 million of shares each in ZoomInfo's IPO, according to a regulatory filing.
Both Warner Music and ZoomInfo appear to be weathering the pandemic relatively well.
ZoomInfo said in the regulatory filing that it expects to experience "slowed growth or decline in new customer demand for our platform" as well as lower demand from existing customers because of the pandemic. Yet the company added that its annualized value of contracts with new customers rose 87% in April from a year earlier.
Warner Music, meanwhile, in April enjoyed a 12% jump in streaming revenue, the largest contributor to its top line. While that was more than offset by decreases related to the coronavirus in segments including ad-supported digital and physical revenue, those areas are expected to recover.
Morgan Stanley, Credit Suisse Group AG and Goldman Sachs Group Inc. are among the banks leading the Warner Music offering. JPMorgan Chase & Co. and Morgan Stanley are leading the ZoomInfo sale.
In: Finance
Darryl Kerrigan is the director of DK Pty Ltd, which is a property investment company in Sydney and the company is registered for Goods and Services Tax (GST). Due to the COVID-19 impact, DK Pty Ltd has decided to rent out their twenty (20) existing office units that they finished in a building project in February 2020. To negotiate rental contracts, DK Pty Ltd employs a property lawyer, Mr. Dennis Denuto. Dennis is a busy lawyer and his practice income is $300,000 per year. DK Pty Ltd offered Dennis a rent-free office in the city of Sydney in exchange for his service to DK Pty Ltd. The market rental value of the office provided to Dennis is $38,000 per year. Required: Advise of the GST obligations and the input tax credit of this arrangements to DK Pty Ltd and Mr. Dennis Denuto.
In: Accounting
On Friday June 19, 2020, the newspaper El Nuevo Día published the news "GM Sectec and Visa educate about digital payments." The news discussed how the pandemic has required companies to adopt technologies for processing electronic payments. The idea is to reduce the use of dollars and cents as payment tools as this can increase the risk of contagion. However, in addition to reducing contagion, the decrease in the use of currencies as payment tools is also a mechanism to reduce the risk of loss of cash, the most liquid asset of companies.
Discuss reasons why electronic payment methods are considered a tool to decrease fraud and cash theft. Consider both whether the company issues payments through electronic methods and how customers pay the company through electronic methods. Discuss what other risks arise from the use of electronic methods.
In: Accounting
Metlock Company leased equipment from Costner Company, beginning
on December 31, 2019. The lease term is 5 years and requires equal
rental payments of $75,477 at the beginning of each year of the
lease, starting on the commencement date (December 31, 2019). The
equipment has a fair value at the commencement date of the lease of
$320,000, an estimated useful life of 5 years, and no estimated
residual value. The appropriate interest rate is 9%.
Click here to view factor tables.
Prepare Metlock’s 2019 and 2020 journal entries, assuming Metlock
depreciates similar equipment it owns on a straight-line basis.
(Credit account titles are automatically indented when
the amount is entered. Do not indent manually. For calculation
purposes, use 5 decimal places as displayed in the factor table
provided and round final answers to 0 decimal places, e.g.
5,275.)
In: Accounting
Swifty Company sells 10% bonds having a maturity value of $2,600,000 for $2,503,904. The bonds are dated January 1, 2017, and mature January 1, 2022. Interest is payable annually on January 1.
A. Swifty Company sells 10% bonds having a maturity value of $2,600,000 for $2,503,904. The bonds are dated January 1, 2017, and mature January 1, 2022. Interest is payable annually on January 1.
B. Set up a schedule of interest expense and discount amortization under the effective-interest method. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)
| year | cash paid | intrest expense | discount amortized | carrying amunt of bonds |
| 2017 | 0 | 2503904 | ||
| 2018 | 260,000 | |||
| 2019 | 260,000 | |||
| 2020 | 260,000 | |||
| 2021 | 260,000 | |||
| 2022 | 260,000 |
In: Accounting
On January 10, 2017, a fire destroyed a warehouse owned by NP Company. NP’s adjusted basis in the warehouse was $575,000. On March 12, 2017, NP received a $740,000 reimbursement from its insurance company. In each of the following cases:
In: Accounting
Magruder Company reports pretax accounting income of $5,000,000 for 2019. The 2019 income tax rate is 20%. INCLUDED in accounting income is depreciation expense of $500,000 which was calculated using the straight line method. Magruder’s tax manager indicates that depreciation expense per the tax return will be $2,000,000 because the tax laws allow more accelerated depreciation. Magruder’s pretax accounting income does NOT include $1,000,000 of prepaid rent that a tenant paid to the company in 2019 because the prepayment represents rent due for 2020. The accountant properly recorded this amount as a liability on the balance sheet (Unearned Rent). The tax manager advises that the $1,000,000 must be INCLUDED in taxable income for 2019. Required: 1. Calculate taxable income income and income tax payable for 2019. 2. Prepare the adjusting entry to record income tax expense, deferred income taxes, and income tax payable.
In: Accounting
Pearl Industries Ltd., a public company, presents you with the
following information:
(a)
Complete the table for the year ended December 31, 2024. The
company depreciates all assets for a half year in the year of
acquisition and the year of disposal. (Round answers to
0 decimal places, e.g. 5,275.)
| Description | Date Purchased |
Cost | Residual Value |
Life in Years |
Depreciation Method |
Accumulated Depreciation to Dec. 31, 2023 |
Depreciation for 2024 |
|||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Machine A |
Dec. 2, 2022 |
$150,000 | $16,000 | 10 | select a method |
| $42,000 | $enter a dollar amount | |||||||||||||
|
Machine B |
Aug. 15, 2021 |
enter a dollar amount | 21,000 | 5 | Straight-line | 29,500 | enter a dollar amount | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Machine C |
July 21, 2020 |
72,800 | 24,000 | 8 | Double-declining-balance | enter a dollar amount | enter a dollar amount |
In: Accounting
On January 1, 2018, Blossom Ltd. purchased equipment for $808,000. The equipment was assumed to have an 8-year useful life and no residual value, and was to be depreciated using the straight-line method. On January 1, 2020, Blossom's management became concerned that the equipment may have become obsolete. Management calculated that the undiscounted future net cash flows from the equipment was $580,750, the discounted future net cash flows was $515,100, and the current fair value of the equipment (after costs to sell) was $505,000.
1. Assuming that Blossom is a private Canadian company following ASPE, and uses the cost recovery impairment model. Record the journal entry to record the impairment loss, if any
2. Assuming that Blossom is a public Canadian company, and uses the rational entity impairment model. Record the journal entry to record the impairment loss, if any
In: Accounting