Western Union

The Western Union Company

Type	Public (NYSE: WU)
Industry	Aiding
Founded	1851
Founder(s)	Ezra Cornell
Headquarters	Englewood, CO, United States
Products	Financial services
Revenue	US$5.08 Billion (FY 2009)[1]
Operating income	US$1.28 Billion (FY 2009)[1]
Net income	US$848 Million (FY 2009)[1]
Total assets	US$7.35 Billion (FY 2009)[2]
Total equity	US$353 Million (FY 2009)[2]
Employees	6,100 (2008)[3]
Website	westernunion.com

The Western Union Company (NYSE: WU) is a financial services and communications company based in the United States. Its North American headquarters is in Englewood, Colorado, United States, 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 May 27, 2010, the company has more than 410,000 Western Union agent locations in over 240 countries and territories. Reported revenues top USD$5 billion annually.

History

In 1851, the New York & Mississippi Valley Printing Telegraph Company was organized in Rochester by Hiram Sibley and others, with the goal of creating one great system with unified and efficient operations. Meanwhile, Ezra Cornell (who would later found Cornell University) had bought back one of his bankrupt companies and renamed it the New York & Western Union Telegraph Company. Originally fierce competitors, by 1855 both groups were finally convinced that consolidation was their only alternative for progress. The merged company was named The Western Union Telegraph Company at Cornell's insistence and Western Union was born.^[4]

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 American-style communications as it is known today.

Wilbur Bold, a 12-year old Western Union messenger boy, Tampa Bay, Florida, 1911.

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 all-American companies tracked.

Former headquarters of WU, located at 60 Hudson, New York, NY, USA, in the early and middle 20th century

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. In 1964, Western Union initiated a transcontinental microwave system 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 international cable system properties and its right-of-way for connecting international telegraph lines into a separate company called Western Union International (WUI) which it divested that year to American Securities . In 1983 American Securities sold WUI to MCI Communications which renamed it to MCI International and moved its headquarters from New York City to Rye Brook, 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. It sold Airfone to GTE for $39 million in cash.^[5]

In 1987, Investor Bennett S. LeBow acquired control of Western Union through an outside of chapter 11 process that was a complex 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 advantage 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 assets. 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 overleveraged 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).^[6] 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,^[7] 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 sold off after New Valley Corporation's bankruptcy and now operates as iTelegram.

The spin off was completed in September and Western Union is now an independent, publicly traded company.

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 automatic routing.

Western Union was a prime contractor in the Automatic Digital Network (AUTODIN) program. AUTODIN, a military application for communication, was first developed in the 1960s and became the precursor to the modern Internet in the 1990s. The Defense Message System (DMS) replaced AUTODIN in 2000.

AUTODIN, originally named "ComLogNet", was a highly reliable service that operated at 99.99% availability, using mechanical punched card readers and tab machines to send and receive data over leased lines. During the peak operation of AUTODIN, the United States portion of the network handled twenty million messages a month. Western Union failed in its attempts to engineer a replacement (AUTODIN II), leading to the development of an acceptable packet-switched network by BBN (the developer of the ARPANET) which became the foundation of today's Internet. AUTODIN service ceased in 2000, years after it had become obsolete.

A related innovation that came from AUTODIN was Western Union's computer based EasyLink service. This system allowed for one of the first marketable email systems for non-government users. In addition, the system allowed the same message to be sent simultaneously to multiple recipients via email, fax, mailgram, or telex services; as well as receive messages from the integrated formats. With the service, users could also perform research utilizing its InfoLink application. EasyLink Services is now its own company.

End of telegrams

As of February 2006, the Western Union website showed this notice:

"Effective 2006-01-27, Western Union will discontinue all Telegram and Commercial Messaging services. We regret any inconvenience this may cause you, and we thank you for your loyal patronage. If you have any questions or concerns, please contact a customer service representative."^[8]

This ended the era of telegrams which began in 1851 with the founding of the New York and Mississippi Valley Printing Telegraph Company, and which spanned 155 years of continuous service. Western Union reported that telegrams sent had fallen to a total of 20,000 a year, due to competition from other communication services such as email. Employees had been informed of the decision in mid-January.

Telegram service in the United States continues to be available through iTelegram and other companies.

Acquisition of Custom House

In May of 2009, Western Union announced their intention to acquire Custom House (global payments) from Gustavson. The deal closed in September 2009, with Western Union purchasing Custom House for $370 million USD. Its acquisition led the company to be officially renamed "Custom House, A Western Union Company."

Specific services

Online

The domain westernunion.com attracted at least 8.7 million visitors annually by 2008 according to a Compete.com study.^[9]

BidPay

As the Internet became an arena for commerce at the turn of the millennium, Western Union started its online services. BidPay was renamed "Western Union Auction Payments" in 2004 before being renamed back to BidPay. BidPay ceased operations on December 31, 2005, and was purchased for USD$1.8 million in March 2006 by CyberSource Corp. who announced their intention to re-launch BidPay. BidPay was later discontinued by CyberSource effective December 31, 2007.^[10]

Western Union Mobile

In October 2007 Western Union announced plans to introduce a mobile money transfer service with the GSM Association, a global trade association representing more than 700 mobile operators in 218 countries and covering 2.5 billion mobile subscribers.

The proliferation of mobile phones in developed and developing economies provides a widely accessible consumer device capable of delivering mobile financial services ranging from text notifications associated with Western Union cash delivery services to phone-based remittance options. Western Union's mobile money transfer service offering will connect its core money transfer platform to m-bank or m-wallet platforms provided by mobile operators and / or locally regulated financial institutions.

How To Use (Sending and Receiving Funds)

Sender goes to a Western Union office and presents funds (plus fees) for "Next Day" or "Money in Minutes" service. Sender provides his/her name and address, the recipient's name, and a designated payment city or town. Western Union provides the sender a 10-digit Money Transfer Control Number (MTCN) that must be transmitted separately by sender to recipient. Recipient then proceeds to a Western Union agent office in the designated payment location, presents the 10-digit MTCN, and a picture identification document. Money then is paid out to recipient. If recipient lacks identification document(s), a pre-arranged password may suffice. Funds are paid out in cash. If payment exceeds a local maximum or cash on hand, then a check is issued. Alternatively, sender may forward funds online to recipient by visiting westernunion.com and following instructions.

Other service offerings

Along with satellite telecommunications, Western Union was also active in other forms of telecommunication services:

WU phone parlors near Times Square, 2008

• Common carrier terrestrial microwave networks
• Business communications networks such as Telex and TWX, which was acquired from AT&T and renamed Telex II by Western Union
• Landline-based leased voice and data communication circuits
• Long distance telephone service
• Airfone air-ground radiotelephone service from 1981 to 1986
• Cellular phone service for a very short time in the early 1980s (the phones were made by 2-way radio manufacturer E.F. Johnson Company)

Sponsorship

Western Union was a major Jersey sponsor of the Sydney Roosters NRL team from 2002–2003. The company still sponsors the team, but not as a jersey sponsor. Around the world, Western Union sponsors numerous community events that help support the diaspora communities that use the global Money Transfer service.

The First Data Western Union Foundation donates money to charitable causes around the world. After the 2004 Indian Ocean tsunami, the Foundation donated US$1,000,000 to the relief effort.^[11]

Scam Industry

Western Union advises its customers not to send money to someone that they have never met in person. Despite its efforts in increasing customers' awareness of the issue,^[12] Western Union is used for internet fraud by scammers.^[13]

Western Union has been required to maintain records of pay-out locations of the individuals who may be laundering the money, though this information may only be obtained through the use of a subpoena. Hence advance-fee fraud and romance scammers continue to receive funds via Western Union confident in the knowledge that money lost to overseas scammers is almost always unrecoverable.^[14] For this reason it is banned as a medium of payment through eBay.^[15][16] The company's E-mail address for customers who think they may have been scammed is spoof@westernunion.com.

Connection to Military Intelligence

There are allegations that Western Union provided US military intelligence with personal information.^[17]

Blocked transactions

Western Union has begun blocking transactions based on suspicion of terrorist connections, as a part of the company's involvement^[18] with the War on Terror. In practice, this has meant denying service to senders who specify recipients with Islamic-sounding names.^[19] Transactions which do not involve persons with such names will be denied as well, based on criteria which the company refuses to disclose. Currently, transfers sent from the Western Union web site require telephone confirmation of the sender's identity. On occasion, the transfer will fail and Western Union's customer service will inform the sender that the transaction "does not meet our requirements." If details are requested, no information other than the fact that their disclosure is forbidden will be given. Numerous customers have reported this problem.^[20][21]

Popular culture

• Western Union (film) a 1941 feature film, based on a story by Zane Grey is a fictionalized account of the building of the transcontinental telegraph line across the Great Plains in 1861.
• Edison, the Man, a 1940 biography of inventor Thomas Edison from telegraph operator to developer of several improvements to telegraph technology to an inventor with financial backing from Western Union.
• Samuel Goldwyn famously said, “Pictures are for entertainment, messages should be delivered by Western Union.”
• The company, famous for telegrams, was often parodied in cartoons [1] by using a comical version of the company name anytime a character received a telegram. Examples include "Western Onion" in The Impatient Patient (1942); "Western Bunions" in Buckaroo Bugs (1944) and Rabbit Transit (1947); and "Eastern Onion" in Homeless Hare (1950).
• The above mentioned Western Union cartoon parodies are themselves parodied in Mel Brooks' 1974 comedy Blazing Saddles, in which the sheriff wearing a Western Union delivery uniform "invents" the Candygram to subdue one of the bad guys.
• The band Five Americans recorded a song called "Western Union", which peaked at Number 5 on the Billboard Hot 100 chart in the spring of 1967. The song concerns a "Dear John" telegram sent to the singer by his girlfriend. The chorus consists of rhythmic "da-da, da-da, da" sounds, mimicking the sounds of telegraphic "dots and dashes".
• In Back to the Future Part II, when Doc is accidentally sent back to 1885 leaving himself stranded there and Marty stranded in 1955, Doc writes a letter to Marty and asks Western Union to deliver the letter to Marty in the year 1955 at the exact location Marty was standing when the time machine was sent back to 1885. The letter contains instructions allowing the time machine to be repaired and taken home to Marty's own time of 1985.
• In the 1983 film A Christmas Story, Mr. Parker won a leg lamp from being mentioned in the Western Union telegram.
• In the Mobb Deep song 'Temperature's Rising', Havoc raps 'I know you need loot, so I send it through Western Union', as he talks about a friend on the run.
• In the Bloodhound Gang song 'Shut Up', Jimmy Pop sings 'I get wired like Western Union' in with other comedic similes.
• In Katy Perry's 2nd & official music video of Thinking Of You, Katy brings out a Department Of War telegram,which is from Western Union.
• Musician K'naan refers to Western Union in the song "15 Minutes Away" on his Troubadour album.

Presidents of the company

• Hiram Sibley (1856—1866)^[22]
• Jeptha Wade (1866—1867)^[23][24]
• William Orton (1867—1878)^[24]
• Norvin Green (1878—1893)^[25]
• Thomas Eckert (1893—1902)^[26]
• Robert Clowry (1902—1910)^[26][27]
• Theodore Vail (1910—1914)^[27][28]
• Newcomb Carlton (1914—1933)^[29]
• Roy White (1933—1941)^[30][31]
• Albert Williams (1941— )^[31]
• Walter P. Marshall (1948-1964)
• Russell McFall (1965—1979)^[32]
• Robert Flanagan (1979—1984)^[32][33]
• Roland Berner (1984)^[33]
• Robert Leventhal (1984—1988)^[33]
• Robert Amman (1988—1994)^[34]

...

• Alan Silberstein (2000—2001)^[35]

...

• Christina Gold (2006— )^[36]

See also

• 60 Hudson Street – Former headquarters
• 92 Code
• Jay Gould – owned a controlling interest in the late 1800s
• Pangram – The quick brown fox jumps over the lazy dog. Used by WU to test teleprinters.
• Pennsylvania v. New York — Question before the U.S. Supreme Court: when Western Union Money orders are supposed to escheat to the state if not fully redeemed, what state is to get the money?
• Western Union, 1939 schooner chartered by Western Union Telegraph Company, used in film as slave ship La Amistad

Further reading

• Wolff, Joshua D., “‘The Great Monopoly’: Western Union and the American Telegraph, 1845–1893” (PhD dissertation, Columbia University, 2008).

References

External links

• Western Union corporate website
• Western Union Locations
• Company history timeline
• Western Union Telegram Collection (MUM00472) owned by the University of Mississippi
• Remittances to the Rescue? from Dollars & Sense (see sidebar for article on Western Union)
• Western Union Telegraph Company (1956). "Telegram for America". http://www.archive.org/details/Telegram1956.  An industrial film showing Western Union telegram handling in the 1950s.
• History of Western Union