The Western Union Company (NYSE: WU) is a financial services and communications company based in the United States. Its North American headquarters is in Greenwood Village, Colorado, and its international marketing and commercial services headquarters are in Montvale, New Jersey. Until it discontinued the service, Western Union was the best known US company in the business of exchanging telegrams.
Western Union has a number of divisions, with products such as person-to-person money transfer, money orders, and commercial services. As of September 9, 2008, the company has 350,000 Western Union agent locations in over 240 countries and territories. Reported revenues top $5 billion annually.
History
Western Union was founded in Rochester, New York, in 1851 as The New York and Mississippi Valley Printing Telegraph Company .
After a series of acquisitions of competing companies by Hiram Sibley and Don Alonzo Watson the company changed its name to Western Union Telegraph Company in 1856 at the insistence of Ezra Cornell, one of the founders of Cornell University, to signify the joining of telegraph lines from coast to coast.
Western Union completed the first transcontinental telegraph line in 1861. In 1865 it formed the Russian American Telegraph in an attempt to link America to Europe, via Alaska, into Siberia, to Moscow.
The telegraph was dominated by Western Union, an industrialized monopoly. They were the first communications empire and the beginning of what was to come for the future of communications as it is known today.
It introduced the first stock ticker in 1866, and a standardized time service in 1870. The next year, 1871, the company introduced its money transfer service, based on its extensive telegraph network. In 1879, Western Union left the telephone business, having lost a patent lawsuit with Bell. As the telephone replaced the telegraph, money transfer would become its primary business.
When the Dow Jones Transportation Average stock market index for the NYSE was created in 1884, Western Union was one of the original eleven companies tracked.
In 1914 Western Union offered the first charge card for consumers; in 1923 it introduced teletypewriters to join its branches. Singing telegrams followed in 1933, intercity fax in 1935, and commercial intercity microwave communications in 1943. In 1958 it began offering Telex to customers. Western Union introduced the 'Candygram' in the 1960s, a box of chocolates accompanying a telegram featured in a commercial with the rotund Don Wilson (announcer). In 1964, Western Union initiated a transcontinental microwave beam to replace land lines.
Western Union became the first American telecommunications corporation to maintain its own fleet of geosynchronous communication satellites, starting in 1974. The fleet of satellites, called Westar, carried communications within the Western Union company for telegram and mailgram message data to Western Union bureaus nationwide. It also handled traffic for its Telex and TWX (Telex II) services. The Westar satellites' transponders were also leased by other companies for relaying video, voice, data, and facsimile (fax) transmissions.
Due to declining profits and mounting debts, Western Union slowly began to divest itself of telecommunications-based assets starting in the early 1980s. Due to deregulation at the time, Western Union began sending money outside the country, re-inventing itself as "The fastest way to send money worldwide" and expanding its agent locations internationally.
In 1963 Western Union organized its cable systems properties and its right-of-way rights of its telegraph lines into a subsidiary called Western Union International (WUI). In 1983 it sold this subsidiary to MCI Communications which renamed it to MCI International and moved its headquarters from New York City to Westchester County, New York.
In the 1970s WUI installed and leased to the U.S. Department of Defense (DOD) dedicated 50 Kbps high speed telecommunications facilities between the continental U.S. and Hawaii, Germany and the United Kingdom to provide a test bed for the DOD's Advanced Research Projects Agency (ARPA). This test bed provided ARPA with a proof of concept for the technology of packet switching which later became the Internet.
In 1981 Western Union purchased a fifty percent interest in Airfone. In 1986, Western Union had pre sold satellite transponder space commercially to raise capital. Westar V was loaded onto Spaceshuttle Challenger to be launched into outer space. When the Challenger suffered catastrophic failure Western Union lost millions of dollars. Lloyds of London refused to reimburse Western Union since it was not an Act of God. This was a major blow to Western Union. It sold Airfone to GTE for $39 million in cash.
In 1987, Investor Bennett S. LeBow acquired control of Western Union through an outside of chapter 11 process that was a highly complicated leveraged recapitalization. The transaction was backed by a total of $900 million in high yield bonds and preferred stock underwritten by Michael Milken's group at Drexel, Burnham Lambert as part of an exchange offer. LeBow installed Robert J. Amman as President and CEO who led a complete strategic, operational and balance sheet restructuring of the company over the subsequent 6 years.
Mr. Amman executed a strategy of redirecting Western Union from being an asset-based provider of communications services, with a money transfer business as a large but less important part of the business, into being a provider of consumer-based money transfer financial services. In so doing, Mr. Amman ran the company as 2 separate companies. One business consisted of the money transfer business, which was funded and operated to take advantge of the significant growth opportunity. The second unit consisted of all the non-strategic communications assets such as the long distance analog voice network, satellite business and undersea cable asstes. In the 3 year period through 1990 Mr. Amman was supported by Robert A. Schriesheim, also installed by Mr. LeBow, as a special advisor who oversaw the divestiture of the 4 non-strategic telecommunications assets for about $280 million.
The official name of the corporation was changed to New Valley Corporation in 1991, just in time for that entity to seek bankruptcy protection as part of Mr. Amman's strategy to eliminate the overleverged balance sheet while continuing to grow the money transfer business . The name change was taken to shield the Western Union name from being dragged through the proceedings (and the bad PR that would cause).. Under the day to day leadership of Robert J. Amman and the backing of LeBow, the company's value increased dramatically through its years operating under chapter 11.
Following various restructurings that included negotiations with Carl Icahn who became a large bond holder, Mr. Amman engineered the sale of New Valley in a bankruptcy auction to First Financial Management Corporation in 1994 for $1.2 billion where he became vice chairman, and a year later merged with First Data Corporation in a $6 billion transaction. On January 26, 2006, First Data Corporation announced plans to spin Western Union off as an independent, publicly traded company. Western Union's focus will remain money transfers. The next day, Western Union announced that it would cease offering telegram transmission and delivery, the product most associated with the company throughout its history. This was, however, not the original Western Union telegram service, but a new service of First Data under the Western Union banner; the original telegram service was discontinued after New Valley Corporation's bankruptcy.
The spin off was completed in September and Western Union is now an independent, publicly traded company.
On September 10, 2007, Los Angeles area immigrant and community organizations joined the Transnational Institute for Grassroots Research and Action (TIGRA) to launch a nationwide boycott against Western Union. This boycott was scheduled two days before a general consumer boycott by immigrants. Groups accuse Western Union of charging exorbitant fees while failing to adequately reinvest in immigrant communities. The community organizations demand that Western Union abandon its "predatory financial practices" or face an ongoing boycott.
Immigrant advocates called for Western Union to adopt a Transnational Community Benefits Agreement (TCBA). According to the advocacy group, the agreement would "lower remittance fees, establish fairer exchange rates, and provide for community reinvestment." According to the advocacy group, Western Union and other money transfer agencies often function as the primary banking service in immigrant communities through check cashing services, yet they remain unregulated by the Community Reinvestment Act and are unaccountable to their primarily low-wage customer base.
Involvement in early computer networking
Western Union telegrams were transmitted through a store and forward message switching system. Early versions were manual telegraph systems. Later systems using teleprinters were semi-automatic, using punched paper tape to receive, store, and retransmit messages. Plan 55-A, Western Union's last paper tape based switching system (1948-1976), was fully automatic, with auto
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