Strategic Audit

Executive Summary

The broadcast television industry contains four dominant players: ABC, NBC, CBS and Fox. Statistics show that 98% of homes in America have television sets. As a result ABC competes to obtain the viewership of these homes in order to sell air time to advertisers. Advertising revenue consisted of $1.6 billion for ABC in 1997; for this reason, the advertiser is ABC's primary focus.

As of February 1996, ABC is a wholly owned subsidiary of the Walt Disney Company. This powerful entertainment conglomerate has proven to be a great asset to ABC's operations. Disney has the financial strength to support ABC's future projects, as well as the brand name recognition to boost ABC's programming and ratings. ABC also maintains relationships with its viewers, advertiser and competitors: CBS, NBC and Fox.

There are many opportunities in this industry, including favorable government regulations, and media support as well as foreign expansion. But some of these opportunities are overshadowed by the threats from Cable television, technological advances, and strong competition. These factors can be paired with ABC's internal strengths: increasing revenues and Disney support to reach a few powerful strategic options.

After careful evaluation of these factors, the following strategies appear to be complimentary to ABC's current industry position: market penetration, market development, backward forward and horizontal integration, and product development and joint venture strategies. Upon further consideration, a market penetration strategy would be most effective for ABC considering the networks current position in the television market. This strategy is best suited to help ABC regain its stronghold in the industry.

Mission Statement:

The mission statement of an organization outlines the relationships, offerings, location, methods of competence maintenance, economic and ethical policies, and unique qualities of that organization. It serves to guide the employees of the firm toward achieving their corporate goals and acts as concise information about the organization to those in the external environment.

The mission of American Broadcasting Company (ABC) is to attract a wide variety of viewers within a national market by providing free television entertainment in order to attain the largest possible audience for commercial spot advertising.

To satisfy this mission statement ABC must consider the following factors:

Relationships:

ABC should maintain relationships with organizations that advertise, viewers, Nielsen Media Research, the Federal Communications Commission, television manufacturers, producers and actors, antenna manufacturers, and satellite technology firms and affiliate stations.

Organizations that advertise provide the main source of revenue for broadcast networks. In order to maintain strong relationships with these advertisers, ABC must attract large viewing audiences through it's programming choices.

Viewers act as suppliers for the network. The advertisers mentioned look to ABC to provide access to large audiences for their messages. As a result, ABC must constantly be concerned with how attractive it's programming is to viewers. Unless viewers are enticed into watching ABC's programming, the audience the advertisers require will not materialize. Viewer numbers, or audience size, is measured by the ratings produced by the Nielsen Media Research firm (Nielsen Media Research, 1997.)

The FCC regulates the broadcast network industry. ABC must maintain good relationships with this government agency in order to renew its bandwidth licenses and also obtain favorable revisions in the relatively restrictive regulations concerning network broadcasting (Standard & Poor's, 1997: 13).

Television manufacturers supply the hardware to the 98 million households that represent 98% of the United States population that own a television set (Nielsen Media Research, 1997.) Without the manufacture of this equipment, ABC would not be able to reach it's viewing public.

Producers and actors are responsible for the creating the programs that ABC airs to attract viewers. The Walt Disney Company produces a great deal of programming for ABC. This programming includes ABC's Sunday night movie, which has been quite well received by audiences (Walt Disney, Annual Report, 1997.)

Antenna manufacturers and satellite technology firms provide the

network with the resources by which it can broadcast its signals to the television in its target households.

Offerings:

The chief revenue-generating offering for ABC comes from providing premium air time during programming that advertisers can use to send messages to as large an audience as possible in as little time as possible.

Location:

ABC's customers can be found anywhere there is a firm that can afford and has the desire to purchase air time in the United States. Such firms could be located domestically or in foreign countries.

Competence Maintenance:

In order to maintain competence in it's industry; ABC must take an active role in the development of new regulations that affect the larger telecommunication's field as a whole. In addition, ABC strives to adapt to the constantly changing cultural trends of its viewers, in order to provide desirable programming that will generate large audiences for advertisers. For example, in 1998 ABC will air World Cup Soccer as part of its sports programming. This reflects viewers newfound interest in soccer (Walt Disney, 1997.)

Economics:

ABC desires to maximize owner wealth by generating a profit from advertising revenue.

Ethics:

ABC must abide by FCC regulations and attempt to be socially aware of it's programming content. Recently, ABC has be focusing on providing wholesome family programming, as seen by the PG-TV ratings it gives to shows such as Rosie O'Donnell.

Uniqueness:

Although ABC is not the oldest broadcast network, it has developed a great aptitude to adjust to change and still come out on top. Throughout ABC's history certain aspects of it's