Executives should look at the big picture when evaluating potential partnerships

July 23, 2012
Executives should look at the big picture when evaluating potential partnerships

Business leaders should draw an important lesson from the recent break up of the partnership behind MSNBC. Microsoft and NBC terminated their cooperation after Comcast – the company that owns NBC – bought out Microsoft’s share in their joint venture.

NBC and Microsoft first teamed up in 1996 and, for a time, the partnership was mutually beneficial. By combining NBC’s broadcast experience and journalism resources with Microsoft’s technological capabilities, the two companies were able to produce a cable channel and website that offered quality news.

However, over time, the situation started to deteriorate as the two businesses began moving in different directions. Microsoft pulled out of the cable channel in 2005.

In recent years, this caused cross-media ad sales to become a major source of tension between the two partners. According to the New York Times, NBC was receiving an increasingly large amount of interest in the purchase of advertisements that would run on both the televised programming and the website. However, Microsoft ran the ad-sales for MSNBC.com – making the process unnecessarily complex.

Therein lies the lesson for CFOs and other financial professionals who may be tasked with evaluating the long-term outlook of particular partnership opportunities. Joint ventures and other cooperative efforts should enhance your company’s capabilities and empower your staff to achieve top-notch performance levels. If a deal with another organization will eventually restrict your business’ ability to innovate, adapt and succeed in a constantly changing market, it is not a partnership that is worth pursuing.

Working with an interim investment analyst can help your company thoroughly examine the long-term value that will be provided by a particular partnership opportunity, as well as the inherent risks.

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