Acquisitions vs. Joint Ventures: The Internet Expansion Strategy of U.S. Media Companies
This paper investigates how media companies choose between acquisitions and joint ventures when they decide to expand their Internet businesses. The dataset covers 155 deals completed by 18 U.S. media companies of the Fortune 1000 in the 2000s. The results show that acquisitions are chosen over joint ventures when the target business is complementary or unrelated with the media firm’s existing businesses, when the level of market uncertainty associated with the target business is low, when the degree of competition around the target business is high, and when the media firm has much acquisition experience and is highly diversified. With the abovementioned factors included, the models presented in this paper correctly classify approximately 90% of media companies’ strategic choices between acquisitions and joint ventures.