Eight Reasons Why Bad Decisions Have Negatively Impacted Major Media Companies Much More than the Internet or the Recession - Steve Blacker - MediaBizBloggers

1. The largest media conglomerates have written off more than $200 billion in assets since 2000. These write-downs resulted from a legacy of value destruction from overpriced acquisitions, "strategic" investments that proved to be worthless, and overpriced contracts for content and talent.

2. Between 1995 and 2005 the biggest media conglomerates underperformed the S&P 500 index on a consistent basis.

3. The conventional wisdom for these media conglomerates were to accelerate growth, diversify internationally, invest in content and exploit digital convergence. Unfortunately, no one realized that the manner of aggregation rather than the creation of content would be the key profit driver. It is no coincidence that Google, the most profitable and successful new media company, is an aggregator, not a content creator.

4. Breaking down the barriers to entry created more competition for fewer ad dollars and overwhelmed an already overwhelmed consumer. From YouTube and Craigslist to The Knot.com and Twitter, a crowded marketplace became commodity driven and most access was free to consumers. Thus the new media, i.e. NY Times.com, stole readership from the old printed media without generating enough revenue to replace the revenue lost by the printed edition.

5. The Internet has destroyed the very heart of the core competitive advantages historically enjoyed by traditional media companies - economies of scale and captive customers. Aside from reducing the fixed-cost nut required to engage in all manner of activities, the Internet all but eliminates the actual or psychological cost that impedes a user from trying an alternative product or services.

6. The challenge is not from the Web but more from traditional business models no longer working and traditional business leaders not being able to both manage their assets and think through digital business acquisitions. Any acquisition has to fit the core competency, have real profit potential and provide synergy for the existing corporate assets. To buy something that is in competition with your core assets makes no sense.

7. Without drastic action and a major paradigm shift, the performance of major media and entertainment companies is unlikely to improve - and is likely to get worse. What's needed is a far better understanding of the key characteristics of various media segments and applying established business principles to determine the best way forward.

8. Being a "strategic visionary" is not what's needed; becoming a "first rate operator" is!

10 Things To Do This Week
1. Visit the Museum of Modern Art and view George Lois's EsquireCovers
2. Go to a supermarket and check out the check out
3. Visit Wal-mart's Web site to see how it's marketing across all categories
4. Go to a Border's or Barnes & Noble and see what customers are buying
5. Watch Telemundo to better understand the Hispanic Market
6. Visit the New York Public Library
7. Watch the kids playing games in a video arcade
8. Read a copy of MOREMagazine - it's one of the most well edited women's lifestyle magazines published
9. Watch at least two programs on BRAVO
10. Try to get more sleep and time at the gym

Steve's new book You Can't Fall Off The Floor - The Insiders' Guide to Re-Inventing Yourself and Your Career chronicles his 50 year career working for over 25 different companies with 189 lessons learned and insider tips from Gayle King, Cathie Black, Chuck Townsend and 28 others; Blacker is still going strong today as a partner in Frankfurt & Blacker Solutions, LLC. His web site is blacker-reinventions.com and e-mail address is blackersolutions@aol.com

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