Alison Alexander, University of Georgia
James Owers, Georgia State University

Much attention has been paid to restructuring in the media industries. Most of this attention has been directed at mergers and acquisitions and the associated increase in industry concentration. What has been largely overlooked is the extent of restructuring that reduces the size of media firms—divestitures. This article examines several cases of major media divestitures and calibrates the impact of these sell-off and spin-off restructuring events on the value of divesting firms. The analysis uses case studies and event study methodology. Given that the overall role of managers of large firms is to maximize the value and stock price, this event methodology directly measures the impact of divestitures on this ultimate goal of maximizing firm value. Case analysis examines the managerial strategies that motivated the divestiture event to explore the complexities of the divestiture as it unfolded. Event analysis results confirm abnormal returns that have the potential to significantly enhance the value of divesting firms.

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