MFM Conference: CFOs in the Hot Seat Discuss Cyber Crises, a Possible Recession and More

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The old saying "out of the frying pan, into the fire" pretty much sums up current challenges for the media industry, from the standpoints of three chief financial officers in the hot seat. Yes, the pandemic appears to be past the peak level and businesses have learned how to adjust (more or less), but now we have inflation with the higher costs that has triggered and the threat of a real recession. And on top of that, cybersecurity is extremely urgent. That's the view of CFOs who took part in the opening keynote during the Media Financial Management Association's annual conference taking place in Tampa this week -- and in person! The trio included Lucy Rutishauser of TV giant Sinclair Broadcast Group; Marie Tedesco of radio and esports-centric Beasley Media Group, and Ginny Hernandez of Trilith Studios, one of the largest TV and film production facilities in America.

The session's moderator -- Cal Mostella, Vice President and Treasurer of Warner Bros. Discovery -- asked the trio what kept them up at night.

For Rutishauser, cyber security is a huge concern, and it should be for every company. "Sinclair went through a cyber incident in October of last year; $75 million later, we came out of it. But not all of that will be covered by insurance," she said.

To prepare others for similar crises, Rutishauser walked through the steps that all businesses need to take to prepare for such a disaster. Getting cyber insurance is key, "although the rates have gone up tremendously." The insurance providers require insured companies to work with certain vendors when incidents occur, so before an attack companies need to vet the vendors, so they don't lose valuable time once something happens.

Company lawyers will guide executives through the key cyber-incident processes, Rutishauser said. But in addition, IT forensic experts need to be on board, as well as IT specialists that help an attacked business recover. Companies also need to identify a negotiator if there's a ransomware request.

"Don't assume that you can just pay the ransomware," Rutishauser warned. "You have to deal with the FBI. If it's a sanctioned group and you pay, then your directors and officers can be held criminally responsible for that."

Forensic accountants are needed to help justify all the insurance claims that are submitted. And a crisis communications team is essential, supplementing regular public relations support. There should also be a cyber committee within a company's board of directors. And make sure that backups to the financial reporting system haven't been compromised, and that trafficking tech vendors are pushing their systems to the cloud.

Get employee mobile numbers now, because that may be the only way to reach them in a crisis, Rutishauser also advised. And create the swat teams to handle the many tasks in advance so that everyone knows who handles what responsibility when disaster strikes.

"As our chief information security officer always says, 'We have to be perfect 100% of the time. They [hackers] only have to be perfect once,'" she said.

"It's not if you're going to get hacked, but when," added Hernandez. She and Tedesco then discussed other top concerns.

Hernandez is focused on "stringently managing costs." Sure, Trilith has big clients like the Walt Disney Co. and Marvel Studios, but while the company is "making money, we're not flowing in it."

Diversity is another issue -- not the kind one most frequently hears about, but rather a diversity of clients. She is also keen to make sure that no possible state legislation jeopardizes the 20% tax credit that companies garner when they base their productions at Georgia-based Trilith.

Tedesco discussed other difficulties that could impact everyone: "One is the inflation that we're living in; everything is more expensive," she said. "It's affecting us; it's affecting everybody. The second thing is the recession that's looming. Is it coming this year or in 2023 or 2024? It doesn't really matter because we have to prepare for it."

Some of Tedesco's issues relate specifically to radio. "How do we maintain the listeners that we have? We need to make sure that our great content can reach everybody on whatever device they're listening to," she said.

Beasley bought an e-sports team "not because we think it's going to be really beneficial cash flow-wise near term, but it's a long-term investment," Tedesco said. The purchase relates to Beasley's interest in attracting younger demographics. "We want them on our platform, to be able to reach them and support our advertisers."

(Pictured at top, left to right: Cal Mostella, Marie Tedesco, Ginny Hernandez, Lucy Rutishauser)

Photo credit: Lucy Kennedy

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