Three Ways to Reverse that Trend
The news came out today that media conglomerate Tribune Co., the owner of the Chicago Tribune, the Los Angeles Times and other properties, filed for bankruptcy protection today. They are $13 billion in debt!
That news flash came about the same time as the New York Times Company’s announcement they are planning to borrow up to $225 million against their mid-Manhattan headquarters building. This new quest is in addition to their two revolving lines of credit with a whopping $400 million each.
As a business owner myself, I have a few suggestions to help these companies turn things around and avert disaster. Now admittedly, my company is nowhere near as large as these; however, there are a few axioms of business that apply to companies no matter what size. If these companies take my advice, I am confident they will become profitable again and reverse these trends.
Furthermore, I feel traditional media companies can improve their fortunes in the Internet Age which many (mostly incorrectly) blame for their downfall. Such an improvement, though, will require significant change and retooling. Unfortunately, for most long-standing traditional media companies, such change is not something they are willing to do. They have demonstrated this unwillingness by ignoring their shareholders and customers and allowing such staggering piles of debt to choke them to almost certain death.
Enough about the problem. Now for some solutions. Basically I see three major needs that have to be addressed as follows.
1. Cut expenses now.
It is unsustainable for any business of any size to continually spend more revenue than they earn. That has to stop now. Need I say more?
Doing this is hard but it forces a business to look at their priorities carefully. Re-examine everything and put a value on it. Start with what is essential and look for ways to reduce and economize that. With what is left after this step, look for ways to maximize the “bang for the buck” by carefully evaluating all expenditures. Don’t automatically roll over budgets, contracts and annual expenditures. Review. Evaluate. Re-negotiate. Look for alternatives. In short, shrink the need and live frugally within your means.
2. Produce a product that consumers want to buy.
Most traditional media companies are failing, in my opinion, because they are not producing a product the consumer wants. Instead, they are trying to sell the same thing to people who don’t want it anymore. That doesn’t work, isn’t working and is suicide.
I have two thoughts on this. First, most traditional media companies like the ones named above are very liberal. Most Americans are “center right” but most traditional media companies are left or even far left. As such, millions of customers have quit buying the editorials and news stories containing leading questions and slanted sources that produce a liberal outcome. These once loyal customers now have alternatives and they are running to them. This brings me to my second point — the Internet.
The Internet has forced the hand of traditional media companies by being able to deliver the same content faster and for less money. Think about this. Why spend (waste) all those resources printing and delivering newspapers when the customer can download the latest news and opinion faster and for less money? For consumers it’s a no-brainer what makes more sense.
But most newspapers haven’t innovated and migrated to the Internet properly. Many produce “mini newspapers” on the Internet instead of offering other more preferred formats. They should be looking for ways to replace paper by encouraging their content to be automatically downloaded to electronic devices and other venues used by customers. The technology exists but the major movers aren’t moving in that direction. Instead they are locked in an old mindset of printing ads and delivering liberal papers to paying subscribers. Both of these models have to change or these companies are dead.
3. Stop doing what doesn’t work and do more of what does. Build a contingency fund.
Basically the first two points say it all but I added the third one to remind us that the above two steps are never-ending. It’s kind of like wash, rinse, repeat. In short, we should always cut costs and deliver products that people want to buy. When we identify something that doesn’t work or costs too much then stop it. It might be a good idea but just not right now or for this application. Revisit it later if you think it’s a good idea. When we find a strategy that works, we should look for ways to efficiently do more of it.
Similarly, every company should know that good times are not eternal and bad times are inevitable. Surpluses should be invested wisely for the slumps that invariably come. That’s wise management. Period. These investments or contingency funds provide resources to deal with future problems from a position of strength. After all, cash talks and opens doors in business.
My concepts are simple (some might argue simplistic) but they work every time they are tried. When is spending less than you earn and delivering products your customers want ever not a winning combination? It’s that basic.
The current system obviously is not working for traditional media companies. Any CEO or Board of Directors that allows their company to stack up such debt as referenced above is no friend of the company or the shareholders they serve. Instead of bonuses or promotions, they should be fired and replaced with competent leaders who will do what it takes to manage the company wisely. With new leaders who understand the challenges, traditional media companies can make the changes needed to properly serve their customers and turn a profit.