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The Blame Game

The Blame Game

It’s about accountability

It’s fashionable for media companies to blame their woes on the Internet, the relentless surge to “free content”.

It’s fashionable, and it’s a lie.

There are one or two Jeremiah’s out in the media wilderness trying to get shareholders to focus on the real cause, but they’ve been mostly drowned out and ignored. In the biggest corner offices, it’s been business as usual, where the business has been about firing employees to protect absurd executive compensation packages and justify over-priced acquisitions.

If you and I ran our businesses like these thieves, we’d be in jail. instead, they’re still flying in private jets and awarding themselves huge bonuses.

Fact:Since 2000, the largest media conglomerates have collectively written down more than $200 billion in assets, a record that would make even Citigroup blush. These write-downs reflect a broad-based legacy of value destruction from relentlessly overpriced acquisitions, ‘strategic’ investments, and contracts for content and talent.

Fact:Media is the only economic sector that historically has achieved growth predominantly through mergers and acquisitions.

Fact:Investing for growth in businesses creates value only when barriers to entry — which is just another way to say ‘competitive advantage’ — limit the competition that would destroy favorable returns.

Uhhh, I’m not a finance major or stock analyst, but I think even I understand that “barriers to entry” for all media have pretty much never been less imposing.

If you don’t already subscribe to The Atlantic, I highly recommend it. If you do nothing else, read the full article from which these quotes came. It’s called, “The Mogul’s New Clothes” in the October issue. It’s short, and worth every minute of your time.

One more quote: “In the media industry, senior executives seem to prefer ‘strategic visionary’ to ‘first-rate operator’ as an appelation.”

I can’t speak for every branch of media, but that one nails many of the guys running consolidated radio companies perfectly.

Business would be tough enough right now with a global recession and changes in the very nature of push advertising, although I bet Apple sells a lot of Nanos by the end of the year, so advertising does still work for at least one company.

But fundamental misjudgments by a few over-compensated ego maniacs running media companies are the primary cause of our sector’s weak returns. Their decisions have cost tens of thousands of jobs, and changed the lives of countless more independent vendors for the worse.

We see plenty of anger about the pampered financial barons who helped crash the world economy.

Isn’t it about time we voiced our outrage at how our industry has been relentlessly driven into the ground over the past 25 years?

They want to blame “the internet” but the truth is, they don’t know how to run their businesses, and we, who make our living in media, are paying the price.

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