FAC12: Chapter 1 Article

http://www.vancouversun.com/business/fp/Rogers+seeks+block+Shaw+from+expanding+east/1976789/story.html

Summary

“Rogers seeks to block Shaw from expanding east,” is an article written by Joe Schneider from The Vancouver Sun. The article is about Rogers Communication Inc. suing its rival Shaw communications Inc. to prevent them from expanding into eastern Canada with the purchase of Mountain Cablevision. Mountain Cablevision is a company located in Hamilton, Ontario. The company currently has around 41, 000 TV subscribers, 28, 000 Internet subscribers and 27, 000 telephone customers in the Hamilton area. The difference between Roger’s and Shaw’s offer for Mountain Cablevision was about $10 million or 3%. Rogers Communication Inc. claims that Shaw is breaking the company’s nine-year old agreement to divide Canada in half with Roger providing its services east of Manitoba and restricting Shaw to western Canada. On the other hand, Shaw claims that any deal restricting a company to a portion of the country is illegal and unenforceable because of the fact it unfairly restricts competition. Charles F. Scott, the lawyer representing Shaw has said, “It’s not a matter of undue competition. It’s a matter of eliminating competition.”

Connection

The connection between the article, “Rogers seeks to block Shaw from expanding east,” and Chapter 1 of the Financial Accounting textbook is business activities. The type of business that was mentioned in both the article and textbook is investing activities. An investment activity is an activity where a business invests funds to accomplish the company’s goals. These activities include the purchase or sale of property/plant/equipment and the purchase or sale of other companies. In the article, Rogers Communication Inc. plans to invest to invest its funds in the purchase of Mountain Cablevision.

Reflection

I think that Shaw is right in thinking they have the right to buy any company it chooses and not be restricted by a nine year old agreement unless they had signed a contract with severe consequences. I believe it is wise of Roger to block Shaw from purchasing Mountain Cablevision. If they are successful in getting the investment, they will gain more clients, a new company, and will have prevented Shaw from expanding into what they think is their territory. However if Shaw is successful in getting the investment, I don’t think there is anything that can stop them from expanding further east, except being short on funds.