The worst symptom of hubris in a captain of business is the belief that a problem can be fixed at any time. If you hear a senior executive of your company make any of the following pronouncements…
“Its business model hasn’t yet been perfected, so let’s wait until that happens.”
“We need to study it more but not yet do anything substantial about it.”
“It will never get as bad as they say, so let’s not worry about it.”
“Our management collectively has centuries of experience and can deal with anything new.”
…then grab your curriculum vitae and jump ship, because you’re crew on the Titanic, and it’s racing headlong into danger.
Most captains of newspapers, magazines, television, or radio whom I’ve met this year are stunned that media environmental challenges they had thought would be navigable are instead hitting them with the force of a trillion ton iceberg.
All have long known that the media environment was changing, but most thought they’d have more time in which to deal with these changes. Some even thought they were such masters of the universe that they could wait until the last minute — whenever that would come.
“Nothing endures but change,” Heraclitus observed 25 centuries ago. Unfortunately, it isn’t schedulable. It doesn’t take meetings. It doesn’t wait to be further studied. Plus, I hate to break this news to people who say the rise of the Internet is just like the rise of radio or of television — change is new every time, and no amount of managerial past experience is an indicator of competency to deal with a new change.
Moreover, change has two insidious characteristics that often aren’t taught in schools of business or media: The pace of change isn’t smooth and, indeed like ice on roads after freezing rain, it can appear suddenly without warning.
On blackboard diagrams in business schools, change is generally taught hypothetically as something straight and smooth. A business is slowly or steadily losing market share or viewership or circulation.
Examined that way in isolation, those declines might seem manageable (if you want to manage decline). Yet in reality, a slow or steady decline can suddenly and unexpectedly turn into a plunge off a cliff, which happens when other factors collide with that decline, such as cable and telephone companies installing broadband access into most of the nation’s homes.
Like water changing to ice, change occurs so suddenly that it can cause even the steadiest media companies to lose control. Water halfway between boiling and freezing doesn’t half freeze; it freezes suddenly when it reaches freezing temperature. That freezing temperature is the inflection point when whatever might have been steady declines suddenly produces a dramatic change.
Captains of newspapers and magazines who thought they were navigating a slowly changing media environment have now suddenly collided with, or at best are trying to navigate around, icebergs they think have appeared out of nowhere. Captains of broadcast networks or stations will soon face the same predicament.
Whatever flags they’re flying, most media captains have thought that the change will never get as bad as has been forecast; there’s still enough time left for them to deal with it; their past experiences are enough to deal with whatever it is; or they can simply wait until the perfect business model has been developed for whatever it will bring. They were wrong.
Newspaper captains are the first to find themselves sinking with their ships. In “Beer a Better Investment Than Newspapers,” I wrote that $10,000 spent three years ago on kegs full of beer would have given you a two-times better ROI (define) than the same money invested in newspaper company stocks. It’s now become a three- to four-times better ROI.
Among the top 10 U.S. newspaper publishers, The New York Times Company has lost 66 percent of its market capitalization during the past 52 weeks; Gannett Company, 78 percent; The McClatchy Company, 90 percent; Media General, 93 percent; Lee Enterprises, 97 percent; and Gatehouse Media and the Journal-Register Company each 99 percent.
The Tribune Company, helmed by Sam Zell, the Captain Ahab of media, and aided by a menagerie of officers he inherited from when Tribune was a publicly traded company, filed for bankruptcy Monday. Earlier in the year, Zell had thought that selling Newsday, its Long Island newspaper, would be enough to keep the venture afloat long enough to complete his quest for a great white whale of profit.
Most major magazine companies are in the position newspaper companies were only two years ago: steadily declining circulations are suddenly beginning to plunge and advertising revenues are sliding off deck discernibly quicker than can be accounted for in the cyclical storm of a recession.
Then there are the broadcasters. A graduate student asked me last week, “How could a big company like CBS, with all its money and brand name, be in any jeopardy?” It’s a good question and, when not punctuated with a question mark, is the type of declaration that senior executives infected with hubris at CBS have long been making. Yet no amount of cash, goodwill, brand name, size, or tradition is a shield against change.
CBS has lost 70 percent of its market capitalization during the past 52 weeks. If ABC, CNN, NBC, and Fox weren’t part of larger conglomerates and had to report their values independently, you’d find the same types of losses.
Embrace change. Change is tumultuous, but brings a stream of progress and the winds of opportunities. Actively seek out its directions. Don’t rely on experiences of the past. Prepare even for the worst forecast.
Act. Don’t just study. Don’t wait for others to show you the way or perfect the business models. Start before it is too late.
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