Indebted Media Companies

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Every 10 years media companies realize that their debt is a extremely heavy burden. At the beggining of the 90’s, News Corporation was close to collapse, and the empire of Robert Maxwell (at that time owner of the Mirror Group) was destroyed. In 2002 AOL Time Warner fired its CEO, Bob Pittman, and Vivendi Universal its CEO, Jean Marie Messier; Bertelsmann did the same with Thomas Middelhoff: those (and other) big media coroporations have increased their debt in order to follow strategies of fast growth.

Companies should choose between the aim of been the faster and bigger player of the market or, by the contrary, the aim of preserving the organization’s future. They can not do both things at the same time: one of the two options is always the priority.

The crisis is a good oportunity to learn. Sooner or later the “perfect storm” arrives: advertising decreases, consumtion goes down, the banks are not so willing to lend…. Well managed media companies are prepared to face such unavoidable disasters: innovation is part of the game, but prudence is the neccesary complement.

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