Picard readings, the business of media

Picard, Chapter 8
I know that account executives (sales people) are a vital part of local television, where I spent most of my career, but I had no idea that collection was such a vital part of the media economy. I mean, it makes sense – if your clients don’t pay you have a huge problem, but is it commonplace to have difficulty collecting from advertisers?
And this is a bit sacrilegious, but having working in both television news and television production, I know the people in production were much more conscious of budgets – what they could spend on which equipment each year, how many light bulbs and videotapes they could get, etc. But news people were either clueless about budgets or kind of arrogant about them. If they wanted satellite time or more equipment they just expected it. I’ve always had the utmost respect for the division between business and journalism, but these days I think a lesson in the stages of development of a media company, and the complexities of budget management, should be mandatory reading for journalists. Kate and Peter, am I wrong?

Picard, Chapter 9
Along those same lines, there are certain institutions in society that serve a higher calling than just that of shareholders, like defense contractors, transportation and media companies. Is it ethical for Boeing to have the same shareholder obligations as, say, Mead paper?
On the other hand, I’m stunned at how much venture capital got tied up in tech companies in the late 1990s (40%; p. 175). I remember a commercial for a financial services company in which the antagonist was trying to talk his buddy into investing in a startup. When his friend asked about the company’s fundamentals, the antagonist says “Uh… it’s got a Web site!” Scary but true.
Public ownership gets scary when a firm like the New York Times Company borrows $250 million to make a loan payment on its new $600 million headquarters… which was built in the midst of a 20-year decline in readership. From an investor’s perspective, it makes owning a piece of Facebook (about 1,000 employees, 200 million members) more attractive than owning a piece of the Times (9,300 employees, 18 million readers, 830,000 print).
Finally, I think it’s disingenuous for media managers to cite the recession as the reason for their historic declines (p. 178). While everybody lost more capital since last September, the media failings preceded the Lehman Brothers failure; media companies fell harder; and they’re less likely to climb back out of the hole. It’s all about changes in demand (Chapter 12, p. 231).

Picard, Chapter 12
Picard dismisses the primacy of price in demand in media companies – that makes sense. It’s a scary world when there’s a declining demand for your product even when it’s free. As I mentioned before, debt is a huge factor for media companies (p. 234). My friend worked for XM Satellite Radio when it started up. They had insanely large infrastructure costs – two satellites built and launched; tens of thousands of pre-built and distributed satellite radios; enough staff to man 100 radio stations 24 hours a day. They were in over $1 billion before they were on the air and, so, were destined to fail. That’s a lot of fixed assets to depreciate. Their timing was also bad – XM launched in 2001, just two weeks after September 11 – and right when MP3 players (iPods) were launching. Sirius has the same problem, now, because there’s no possible change in reinvestment and productivity (p. 236-7).
The personnel issue reappeared on p. 242. How does a saturation of available journalism talent dilute the value of journalists? I’m sure we’re seeing an increase in journalism graduate school and former newspaper reporters keep popping up in other roles, like crowd-funded news outlets (spot.us, for example). How do we maintain “eat your peas journalism” in an era when its value is declining? Maybe that’s a good area to invest in R&D (p. 243).