Continental Cablevision, Inc./Fintelco Joint Venture

35 Pages Posted: 25 Feb 2020

See all articles by Robert F. Bruner

Robert F. Bruner

University of Virginia - Darden School of Business

Katarina Paddack

affiliation not provided to SSRN


In February 1994, the senior management team at Continental Cablevision received the final joint-venture agreement from Fintelco, a potential partner in Argentina. The tasks for the student are to review the terms of the agreement, the outlook for the Argentine economy, and the corporate cultures at both companies to decide whether Continental should sign the agreement.



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On February 1, 1994, the senior management team at Continental Cablevision met to evaluate the terms of the proposed final agreement to establish a joint venture in Argentina. The venture partner was Fintelco, a leading television-cable operator in Buenos Aires owned by Samuel Liberman. The team at Continental consisted of CEO Amos Hostetter; senior vice president for Corporate and Legal Affairs, Robert Sachs; CFO Nancy Hawthorne; and senior vice president for Programming, Robert Stengel. After six months of start-and-stop negotiations, communication difficulties, and numerous trips between Argentina and the United States, the two cable companies fashioned terms for a joint-venture structure that gave Continental a 50% equity stake in Fintelco for $ 80 million. The team believed that Continental would be the first U.S. cable company to initiate talks with one of the four main Argentine cable companies. Despite Continental's apparent jump on the competition, the senior management team wanted to reassess the returns and potential risks associated with conducting business in Argentina. The team wanted to move quickly to consummate the arrangement and needed to conclude the assessment within a few days. Was this an appropriate arrangement for Continental in terms of price, terms, risks, and returns? Was the joint venture structure the best option for Continental? How attractive was the Argentinean market, and did the market fit with Continental's strategy? And finally, was Samuel Liberman the right partner for Continental?

Continental Cablevision

Continental Cablevision, Inc., was founded in 1963 by two young Harvard Business School graduates, Amos B. Hostetter, Jr., and H. Irving Grousbeck, who viewed the lack of cable service in small cities of the Midwest as a business opportunity. Installing a 520-foot antenna in a cornfield in Tiffin, Ohio, the two entrepreneurs began Continental Cablevision, which served an area of less than five square miles. Ten television channels were offered over coaxial cable to subscribers (see Exhibit 1 for definitions of cable terms). By 1994, Continental had grown to become the third largest cable multiple-system operator (MSO) in the United States with revenues of $ 1.2 billion (see Exhibits 2 and 3 for Continental's income statement and balance sheet). Though Continental's balance sheet showed negative equity, creditors remained confident of the firm's ability to service its debt, in light of its very strong cash flow. High depreciation expense shielded the firm's income from taxes. As of December 1993, the company's S&P bond rating was “BB.” Remaining a privately held company, Continental served over 3 million subscribers in 16 states.

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Keywords: corporate culture, entrepreneurs, exchange rates, financial analysis, foreign investment, government regulation, strategic alliance, joint ventures, international, Alternative Business Issue or Setting

Suggested Citation

Bruner, Robert F. and Paddack, Katarina, Continental Cablevision, Inc./Fintelco Joint Venture. Darden Case No. UVA-F-1149, Available at SSRN:

Robert F. Bruner (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-3823 (Phone)
434-924-0714 (Fax)


Katarina Paddack

affiliation not provided to SSRN

No Address Available

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