Strengths EchoStar has entered into Joint Ventures and partnerships with competitors. 0.100 4 0.40 EchoStar has minimally recognizes the need to diversify the market in product offering, specifically WebTV. 0.075 1 0.08 EchoStar's technology permits fast market penetration in both foreign and domestic markets. 0.075 3 0.23 EchoStar has bought Hughes' DirecTV. 0.075 4 0.30 EchoStar's owns its network. 0.025 3 0.08 EchoStar is focused on providing quality DBS service to consumers. 0.025 4 0.10 EchoStar has a stable upper management environment, key executives have been with the company since its' inception. 0.025 4 0.10 Weaknesses EchoStar's market share is significantly less than competing mediums due to high installation and monthly access charges. 0.100 1 0.10 EchoStar is financing both losses and operations and is currently operating at a net loss of $172,627,000 through September of 2001. 0.100 1 0.10 EchoStar pending FCC approval of the acquisition of Hughes will undergo costly and time consuming restructuring. 0.100 2 0.20 EchoStar's sales occur 98% national and 2% international and only in the consumer market. 0.075 1 0.08 EchoStar only operates in the consumer market, due to pricing and portability of the product this mitigates the rental community. 0.075 1 0.08 EchoStar has no intellectual property - specifically patents or copyrights and is facing lawsuits for patent infringements on existing products. 0.075 1 0.08 EchoStar has no current vertical or horizontal service in which to compete in the market. They have not considered entering the premium content market. 0.050 2 0.10 EchoStar stock continues to decline up to 35.2% over the last 12 months and has never yielded a dividend. 0.025 1 0.03 Totals 1.000 2.03 Weight Relative Importance of that Factor to being Successful in the Firm's Industry 0.0 = Not Important 1.0 = Very Important or Critical Rating The Manner in which the Firm's Current Strategies Respond to the Factor 1 = Major Weakness 2 = Minor Weakness 3 = Minor Strength 4 = Major Strength Score < 2.50 = The Firm Exhibits Internal Weaknesses >2.50 = The Firm Exhibits Internal Strengths 1 External Evaluation Analysis (EFE Matrix) for EchoStar EchoStar EFE: Critical Success Factors Weight Rating Weighted Score Opportunities Competitors are unable to respond to aggressive market penetration due to technological constraints. 0.100 4 0.40 The addition and development of new technology entering into the industry market (examples include interactive TV, TIVO) may provide opportunity to diversify. 0.100 3 0.30 Internet / the content delivery has in the last 6 years continued to be a growing market. 0.100 1 0.10 The lowering of interest rates may encourage some renters to purchase homes increasing the market segment. 0.050 2 0.10 There is a big sell through market for movies and premium content. 0.025 4 0.10 Threats FCC may invoke strict control guidelines and regulation of the broadband industry mitigating profitability. 0.125 3 0.38 Competitors offer extra services and are creating new ways to differentiate their products and services. (lower prices, voice and data packaging) 0.100 2 0.20 The population is currently using other access methods and may be resistant to change. 0.075 1 0.08 There is little control or regulation of duplication and pirating of video movies at this time, however, greater focus could occur in the future due to declining profit margins and a potential recession. 0.075 1 0.08 The threat of a recession may reduce the number of subscribers because of cost consideration. 0.075 1 0.08 Some premium content providers own pay cable TV stations (Disney) and thus may reduce product distribution. 0.050 2 0.10 A declining economy may frighten current investors and deter future potential investors. 0.050 1 0.05 The movie distributors control the price of the movies and thus could have a potentially negative impact on future product prices and distribution. 0.025 2 0.05 New technology such as interactive television may mitigate the market share if partnerships are not considered outside the immediate industry. 0.025 1 0.03 Studios release times may shorten for the Pay-per-view, Pay cable, and other mediums threatening profitability for the content delivery industry. 0.025 1 0.03 Totals 1.000 2.05 Weight Relative Importance of that Factor to being Successful in the Firm's Industry 0.0 = Not Important 1.0 = Very Important or Critical Total must equal 1.00 Rating The Manner in which the Firm's Current Strategies Respond to the Factor 1 = Poor Response 2 = Average Response 3 = Above Average Response 4 = Superior Response Score < 2.50 = The Firm's Strategies are not Capitalizing on Opportunities or Avoiding External Threats >2.50 = The Firm is Responding in an Outstanding way to Existing Threats and Opportunities in its Industry 2 Internal Factor Evaluation Analysis (IFE) for Verizon Verizon IFE: Critical Success Factors Weight Rating Weighted Score Strengths Largest wireless communications provider with 27.5 million wireless voice and data customers. The companys footprint covers nearly 90% of the U.S. population, 49 of the top 50 and 96 of the top 100 U.S. markets. In wireless, J.D. Power ranks Verizon Wir 0.100 4 0.4 Verizon Online offers a complete suite of dial-up, DSL and dedicated Internet access services for residential consumers and small and medium-size businesses. Dial-up and dedicated Internet access from Verizon Online is available in all 50 states and the D 0.070 4 0.28 112 million access line equivalents - which reflects data transmission services 0.080 3 0.24 Building a global network to provide seamless end-to-end communications by delivering data, voice and Internet solutions to customers around the world. 0.040 3 0.12 Up to 16 percent of all new high-speed subscribers are first-time Internet users. The market for high-speed access isn't limited to early-adapters or the Internet savvy. 0.040 3 0.132352941 Verizon Online recently began offering networking options that allow consumers or businesses to share one DSL connection among multiple PCs and laptops, and a new broadband portal. 0.080 3 0.24 Future plans include offering value-added services such as games, streaming video and audio clips, movies and trailers, music downloads, Internet radio, and enhanced Internet filtering and security. 0.100 3 0.3 Verizon Wireless was the winning bidder for 113 licenses in the FCCs recently concluded auction of 1.9 GHz spectrum. 0.070 4 0.28 Affiliate Program. You place the VerizonWireless.com link on your site and direct visitors. 0.020 3 0.06 Through an agreement with 2Wire, Inc., Verizon Online will offer the HomePortal 100 gateway. The HomePortal uses existing home telephone wiring to create a local area network (LAN) that connects multiple personal computers and laptops to a single DSL co 0.100 4 0.4 Weaknesses Not a content provider. 0.090 1 0.09 Not a Government supplier? Sold substantially all of GTE Government Systems to General Dynamics Corporation for $1.0 billion in cash. 0.100 1 0.1 Verizon Online offers the 2Wire HomePortal 100 to its customers for $199.95. A change to a higher bandwidth service is not necessary to use the gateway product. However, bandwidth is shared when two or more users are online and working at the same time, 0.040 2 0.06 DSL does not access all consumers. 0.070 1 0.07 Totals 1.000 2.77 Weight Relative Importance of that Factor to being Successful in the Firm's Industry 0.0 = Not Important 1.0 = Very Important or Critical Rating The Manner in which the Firm's Current Strategies Respond to the Factor 1 = Major Weakness 2 = Minor Weakness 3 = Minor Strength 4 = Major Strength Score < 2.50 = The Firm Exhibits Internal Weaknesses >2.50 = The Firm Exhibits Internal Strengths External Factor Evaluation Analysis (EFE) for Verizon Verizon EFE: Critical Success Factors Weight Rating Weighted Score Opportunities Can continue to expand DSL services as fast as possible. 0.200 4 0.8 Can take advantage of the home network approach with 2Wire. 0.100 3 0.3 Good marketing strategy with non-profit high tech promotion/DSL customer capture. 0.050 3 0.15 Threats Cable systems are the closest threat. 0.100 3 0.3 We are unable to predict definitively the impact that the 1996 Act will ultimately have on our business, results of operations, or financial condition. The financial impact will depend on several factors, including the timing, extent and success of competition in our markets, the timing and outcome of various regulatory proceedings and any appeals, and the timing, extent and success of our pursuit of new opportunities resulting from the 1996 Act. We anticipate that these industry changes, together with the rapid growth, enormous size and global scope of these markets, will attract new entrants and encourage existing competitors to broaden their offerings. 0.200 2 0.4 Current and potential competitors in telecommunication services include long distance companies, other local telephone companies, cable companies, wireless service providers, foreign telecommunications providers, electric utilities, Internet service providers and other companies that offer network services. Many of these companies have a strong market presence, brand recognition and existing customer relationships, all of which contribute to intensifying competition and may affect our future revenue growth. In addition, a number of major industry participants have announced or recently consummated mergers, acquisitions and joint ventures which could substantially affect the development and nature of some or all of our markets. 0.100 2 0.2 The FCC is currently considering two modifications to its universal service programs, both relating to support for rural carriers. The first, a proposal by an appointed policy task force, would provide additional support for intrastate services provided by rural carriers. The second, a proposal by a coalition of rural carriers, would make explicit support for interstate access services provided by rural carriers. The FCC is likely to address both these proposals in 2001. 0.050 2 0.1 In November 1999, the FCC announced its decision setting forth new unbundling requirements, eliminating elements that it had previously required to be unbundled, limiting the obligation to provide others and adding new elements. Appeals from this decision are pending. In addition to the unbundling requirements released in November 1999, the FCC released an order in a separate proceeding in December 1999, requiring incumbent local exchange companies also to unbundle and provide to competitors the higher frequency portion of their local loop. 0.200 2 0.4 Totals 1.000 2.65 Weight Relative Importance of that Factor to being Successful in the Firm's Industry 0.0 = Not Important 1.0 = Very Important or Critical Total must equal 1.00 Rating The Manner in which the Firm's Current Strategies Respond to the Factor 1 = Poor Response 2 = Average Response 3 = Above Average Response 4 = Superior Response Score < 2.50 = The Firm's Strategies are not Capitalizing on Opportunities or Avoiding External Threats >2.50 = The Firm is Responding in an Outstanding way to Existing Threats and Opportunities in its Industry Internal Factor Evaluation (IFE Matrix) for AOL Time Warner AOL Time Warner IFE: Critical Success Factors Weight Rating Weighted Score Strengths The 60 or so Time magazine publications reach 268 million magazine readers, and the CNN global touch is one billion people. 0.200 4 0.8 Extensive access to and control of movie content. 0.100 3 0.3 Increasing the customer base and customer dependency on AOL by incorporating AOL services within its browser offerings such as chat rooms, buddy lists, and instant messaging. 0.100 4 0.4 AOL Time Warner is also exploring a synergistic partnership with Sony Corporation. 0.050 4 0.2 CNN financial (popular content) is a television network that is also providing content for an Internet personal-finance Web site. 0.100 3 0.3 Large subscriber base provides economies of scale. 0.100 3 0.3 Dialup and cable access customers may, if they switch, just switch internally and remain as customers. 0.050 3 0.15 Weaknesses Fast growth reduces services reliability. 0.200 2 0.4 Dependence on cable and telephone lines reduces reliability. 0.100 1 0.1 Totals 1.000 2.95 Weight Relative Importance of that Factor to being Successful in the Firm's Industry 0.0 = Not Important 1.0 = Very Important or Critical Rating The Manner in which the Firm's Current Strategies Respond to the Factor 1 = Major Weakness 2 = Minor Weakness 3 = Minor Strength 4 = Major Strength Score < 2.50 = The Firm Exhibits Internal Weaknesses >2.50 = The Firm Exhibits Internal Strengths 5 AOL Time Warner EFE AOL Time Warner EFE: Critical Success Factors Weight Rating Weighted Score Opportunities Competitors have to respond to aggressive market capture and control by AOL Time Warner by trying to get their customer base (130 million subscribers) to switch. 0.200 4 0.80 The population is currently using Internet dialup access methods and may be resistant to change, especially if changes impact the many services provided (ie, email, buddie lists). 0.125 3 0.38 Threats FCC may invoke strict control guidelines and regulation of the broadband industry mitigating profitability. 0.125 3 0.38 Competitors offer differentiated products and technologically unique services. 0.100 2 0.20 The addition and development of new technology entering into the industry market (examples include interactive TV, TIVO) may provide competitors an opportunity to capture part of customer base. 0.100 3 0.30 Video movies are subject to pirating, making it difficult to ensure content value and subscriber loyalty 0.075 2 0.15 The threat of a recession may reduce the number of subscribers because of cost consideration. 0.075 2 0.15 Some other premium content providers own pay cable TV stations (Disney) and can make Internet partnerships with others. 0.050 2 0.10 A declining economy may threaten subscriber interest in services and functionality due to cost. 0.050 2 0.10 Internet technology and content development provide a growing market that provides others with opportunities to capture customers. 0.100 2 0.20 Totals 1.000 2.75 Weight Relative Importance of that Factor to being Successful in the Firm's Industry 0.0 = Not Important 1.0 = Very Important or Critical Total must equal 1.00 Rating The Manner in which the Firm's Current Strategies Respond to the Factor 1 = Poor Response 2 = Average Response 3 = Above Average Response 4 = Superior Response Score < 2.50 = The Firm's Strategies are not Capitalizing on Opportunities or Avoiding External Threats >2.50 = The Firm is Responding in an Outstanding way to Existing Threats and Opportunities in its Industry 6 Internal Factor Evaluation Analysis (IFE Matrix) for Viacom Viacom IFE: Critical Success Factors Weight Rating Weighted Score Strengths Well-rounded media products-publishing, film,Blockbuster,content,Internet 0.095 3 0.30 Brand Name familiarity 0.143 3 0.42 Library /Archive of Content 0.048 3 0.15 Cable Network(MTV,BET,Nickelodeon) 0.143 4 0.56 Financial Status 0.095 3 0.30 Weaknesses New Company Hasnt withstood the test of time 0.095 2 0.20 CBS Network not as strong as NBC or ABC as a whole- does not have major markets in television 0.190 1 0.19 Profits reduced in Blockbuster segment due to old technology VHS 0.048 2 0.10 Not associated with major ISP to compete with AOL/TimeWarner 0.143 1 0.14 Totals 1.000 2.36 Weight Relative Importance of that Factor to being Successful in the Firm's Industry 0.0 = Not Important 1.0 = Very Important or Critical Rating The Manner in which the Firm's Current Strategies Respond to the Factor 1 = Major Weakness 2 = Minor Weakness 3 = Minor Strength 4 = Major Strength Score < 2.50 = The Firm Exhibits Internal Weaknesses >2.50 = The Firm Exhibits Internal Strengths 7 External Factor Evaluation (EFE Matrix) for Viacom Viacom EFE: Critical Success Factors Weight Rating Weighted Score Strengths Childrens Market- Growing Nickelodeon Network to ultimately compete with Disney 0.070 3.00 0.21 UPN Increasing television market-now broadcasting Buffy; Star Trek 0.080 3.00 0.24 Paramount Pictures-making deals with Dream Works, 20 th Century and using own brand name. For example MTV and Nickelodoen Movies 0.090 2.00 0.18 Cable Network- BET, Music Networks 0.120 3.00 0.36 Blockbuster Venture 0.070 2.00 0.14 News Market-Sept. 11 th tragedy has made News and Finance important content. Viacom has the ability to capture larger market using reputation of 60 Minutes etc 0.100 2.00 0.20 Internet possibilities-has not really begun to attack the possibilities 0.010 1.00 0.01 Financial Status 0.020 3.00 0.06 Weaknesses Television Network Weakness The weakest of major networks. Effects advertising dollars. 0.150 2.00 0.30 With the exception of various major sporting events sporadically throughout the year no real sports content. Disney corners the market with its majority ownership of ESPN 0.070 1.00 0.07 Economy-Current downward trend on spending and luxury items. 0.070 3.00 0.21 Internet Business-No ISP niche or market attacked 0.150 1.00 0.15 Totals 1.000 2.13 Weight Relative Importance of that Factor to being Successful in the Firm's Industry 0.0 = Not Important 1.0 = Very Important or Critical Rating The Manner in which the Firm's Current Strategies Respond to the Factor 1 = Major Weakness 2 = Minor Weakness 3 = Minor Strength 4 = Major Strength Score < 2.50 = The Firm Exhibits Internal Weaknesses >2.50 = The Firm Exhibits Internal Strengths 8 Internal Factor Evaluation (IFE Matrix) for Disney Disney IFE: Critical Success Factors Weight Rating Weighted Score Strengths The company has a widely recognized name 0.164 4 0.66 The company's name represents family values and a strong family orientation 0.274 4 1.10 Disney owns ESPN, one of the largest providers of sports content in the world 0.014 3 0.04 Disney has recognized the need to expand internationally, currently it is positioned in Europe and Asia 0.014 3 0.04 Disney has a barad diversification of products from theme parks to production to retail stores 0.027 3 0.08 Disney owns and operates numerous media networks 0.055 4 0.22 Disney is currently in partnership with CNBC 0.041 3 0.12 Disney appeals to the 9-14 age demographic but has potentiatl to trancend all age demogrphics with its broad product differentiation. 0.055 4 0.22 0.000 0.00 0.000 0.00 Weaknesses 0.000 WDIG - On line service 0.164 1 0.16 September 11th 2001 had a dramatic and potentially long lasting effect on travel and tourism, affecting Disney's revenues. 0.055 1 0.05 September 11th 2001 had a dramatic affect on advertising. 0.014 2 0.03 Disney is currently undergoing a downsizing. 0.041 2 0.08 Disney is paying large amounts of expense for operationg costs of both national and international theme parks, while revenues decline. 0.027 2 0.05 Disney currently does not own or opperate an ISP 0.055 2 0.11 Totals 1.000 2.97 Weight Relative Importance of that Factor to being Successful in the Firm's Industry 0.0 = Not Important 1.0 = Very Important or Critical Rating The Manner in which the Firm's Current Strategies Respond to the Factor 1 = Major Weakness 2 = Minor Weakness 3 = Minor Strength 4 = Major Strength Score < 2.50 = The Firm Exhibits Internal Weaknesses >2.50 = The Firm Exhibits Internal Strengths 9 External Factor Evaluation Analysis (EFE Matrix) for Disney Disney EFE: Critical Success Factors Weight Rating Weighted Score Opportunities European 0.222 3 0.67 Media Network Expansion 0.056 3 0.17 Capture more of the 18-49 demographic 0.167 3 0.50 Cable Network 0.111 3 0.33 Threats Economy is declining domestically which may affect international markets and a recessionin in the US 0.111 2 0.22 The merger of AOL and Time Warner created a formidalble media conglomerate with both content and network capability 0.278 2 0.56 Viacom 0.056 2 0.11 Totals 1.000 2.56 Weight Relative Importance of that Factor to being Successful in the Firm's Industry 0.0 = Not Important 1.0 = Very Important or Critical Total must equal 1.00 Rating The Manner in which the Firm's Current Strategies Respond to the Factor 1 = Poor Response 2 = Average Response 3 = Above Average Response 4 = Superior Response Score < 2.50 = The Firm's Strategies are not Capitalizing on Opportunities or Avoiding External Threats >2.50 = The Firm is Responding in an Outstanding way to Existing Threats and Opportunities in its Industry 10 Internal Factor Evaluation Analysis (IFE Matrix) for Adult Content Industry Critical Success Factors Weight Rating Weighted Score Strengths The industry is still profitable despite the decline in Adult content Internet use. 0.100 3 0.3 The Internet currently only generates $1 billion of a $2.6 - $3.9 billion industry, comparable to magazine sales 0.100 4 0.4 The adult industry is beginning to partner with mainstream business, legitimizing the industry and creating new investment opportunities 0.100 4 0.4 The industry has recognized the need to increase purchase anonymity of products. 0.075 3 0.225 Currently Adult Video releases sell 1,000 to 2,000 units through direct sales 0.075 4 0.3 More than half the requests on search engines are "adult-oriented." The top 3 word searches on the Internet are 1. Sex, 2. MP3, 3. Hotmail. 0.075 4 0.3 The top 4 Internet uses by interest are: 1. News/Information, 2. Adult, 3. Chat room/Discussion Groups, 4. 0.050 3 0.15 Weaknesses Only 10.5% of U.S. females have gone to an adult content website in contrast to 31.9% of U.S. males 0.100 1 0.1 Many of the remaining Internet companies have purposefully steered away from pornography because of the negative image. 0.075 1 0.075 Adult content consumer penetration by Internet users has decreased in the U.S. from 21.3% to 20.2% 0.075 1 0.075 The industry has a negative image in that overbilling and fraudulent "free trial" offers have been prevalent. 0.075 1 0.075 The industry survives through complicated licensing agreements and partnerships, diluting profits 0.050 2 0.1 Due to the mass entrannce into the adult content market - profits have become marginalized 0.050 2 0.1 Totals 1.000 2.60 Weight Relative Importance of that Factor to being Successful in the Industry 0.0 = Not Important 1.0 = Very Important or Critical Rating The Manner in which the Industry's Current Strategies Respond to the Factor 1 = Major Weakness 2 = Minor Weakness 3 = Minor Strength 4 = Major Strength Score < 2.50 = The Industry Exhibits Internal Weaknesses >2.50 = The Industry Exhibits Internal Strengths 11 External Factor Evaluation (EFE matrix) for Adult Content Industry Critical Success Factors Weight Rating Weighted Score Opportunities The industry caters and appeals more to men than women thus an important demographic has not been penetrated. 0.100 1 0.1 European Market is set to explode into to Broadband - incresing Internet usage and advertising 0.100 2 0.2 Diversification of the industry has provided new sources of third-party financing and equity investment to fund 0.100 4 0.4 90 percent of household with annual incomes above $75,000 have a PC at home and 80 percent have internet 0.075 2 0.15 U.S. Internet users at work spend over twice as much time on-line as home surfers. 0.050 2 0.1 Net usage has increased from 57 million users to 94 million users since 1998 0.050 3 0.15 Key Internet usage demographic markets are the 18-34 age group (28.5%) and the 35-54 age group (31.2%) 0.050 3 0.15 Threats The industry is viewed by many as seedy and immoral. 0.125 1 0.125 Government regulation of the industry and legal restrictions of content distribution may inhibit profitability. 0.100 2 0.2 Women control the majority of consumer purchasing dollars 0.075 1 0.075 Regulation of Broadband technology by the FCC may limit new sources of distribution revenue. 0.075 2 0.15 European Internet firms have begun introducing adult content and e-commerce packages to increase their revenues 0.025 1 0.025 The declining US economy may reduce the desire for broadband service, a survey of 2,500 households reveals 0.025 1 0.025 Limitation on key advertising markets, tobacco, alcohol etc. may limit source of advertising revenue. 0.025 3 0.075 A declining economy may frighten current investors and deter future potential investors. 0.025 4 0.1 Totals 1.000 2.03 Weight Relative Importance of that Factor to being Successful in the Industry 0.0 = Not Important 1.0 = Very Important or Critical Total must equal 1.00 Rating The Manner in which the Industry's Current Strategies Respond to the Factor 1 = Poor Response 2 = Average Response 3 = Above Average Response 4 = Superior Response Score < 2.50 = The Industry's Strategies are not Capitalizing on Opportunities or Avoiding External Threats >2.50 = The Industry is Responding in an Outstanding way to Existing Threats and Opportunities in its Industry 12