Prediction about the advertising rates

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Reference no: EM13198259

In 1989, the Detroit Free Press and Detroit Daily News the only daily newspapers in the city obtained permission to merge under a special exemption from the antitrust laws. The merged firm continued to publish the two newspapers but was operated as a single entity.

a. Before the merger, each of the separate newspapers was losing about $10 million per year. What forecast would you make for the merged firms’ profits? Explain.

b. . Before the merger, each newspaper cut advertising rates substantially. What explanation might there be for such a strategy? After the merger, what prediction would you make about advertising rates?

Reference no: EM13198259

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