While this move should enhance NTL's short-term financial outlook and may generate a measure of excitement for customers and investors, the gains may not outweigh the long-term strategic liabilities inherent in both companies pre-merger and likely, post-merger. Fiscally, growth may prove to be a risky strategy for a company that has dealt with financial difficulty in the recent past. Yet, market conditions may have left NTL with little alternative but to seize growth opportunities when they are possible.
This study will analyze how NTL's recent acquisition of TeleWest fits and contrasts with the outline Bob de Wit and Ron Meyer present in their book Strategy Synthesis (2005). The book creates a fundamental framework for scrutinizing the strategic coherence from business, corporate, and network levels, the industry and international contexts, as well as the organizational context and organizational purpose. Because NTL is such a large and diversified organization, the unit of analysis will be mostly limited to NTL's residential cable, digital television, and pay TV services within the U.K, all under the umbrella unit, NTL Cable PLC. It will begin by providing a general overview of NTL, and its recent acquisitions. The study will then analyze how actual events and strategies from NTL's brain trust compare with the topical outline from de Wit and Meyer. Finally, this study will discuss the results of this analysis and provide a prognosis for the future of this growing company.
A brainchild of the new global economy, NTL Incorporated (NTLD) is a U.S. company, founded in Delaware in 1993, as International CableTel, and headquartered in New York. The business opportunity was created in 1991, with British deregulation of cable and telecommunications services, and founder George Blumenthal's 1993 acquisition of Insight UK's cable systems and its roughly one million household customersi. Changing its name to NTL Incorporated in 1996, the company has continued to construct, acquire, and diversify, and upon the TeleWest merger, is slated to become the largest cable and telecommunications provider in the U.K. in terms of customers. The company's growth, however, has not always coincided with the strength of its financial outlook. Recovering from a bankruptcy filed in 2002, the company has struggled to attain a strong level of profitability and gain strong investor confidence, although NTL has improved its financial position in recent years. According to its annual report, NTL earned nearly two billion dollars in 2005, and predicts to service over 12 million households and businesses following the TeleWest merger. In addition, NTL is in the process of acquiring Virgin Mobile, and the marketing rights to use the well-respected brand nameii. This acquisition will make NTL the region's only "four play" organization, offering broadband, cable/pay TV, telephone, and mobile phone services. In 2005, NTL introduced a Video on-Demand (VOD) service called "front row" that became a pioneer endeavor. Even with these maverick moves, however, the stock value has decreased by over 56 percent from April 2005 to April 2006iii.
On the business-level, NTL appears, for the most part, to employ an "outside-in" perspective as opposed to an "inside-out" perspective. The cable industry is a heavyweight marketplace considering the massive start-up and technology costs. There are few companies