One of the things we used to do every year in the TV business was our 5 year plan. We’d project out ratings and revenues and expenses and someone in the accounting department would make sense of it all. The same sort of exercises went on then (25 years ago) at most businesses, as they do now, which is wonderful except for one thing.The finance guys would use our projections to answer questions such as “should we take on more debt to buy another station?” and “how many employees should we add so we can count all this money?”. Those debt obligations often ran more than the 5 year time frame.
Fast forward to today. The speed with which technology and markets change is frightening. More importantly, what you’re seeing today is the old style of business planning playing itself out in a bunch of media companies (and in other sectors as well) who took on long-term oligations with a short-term level of certainty.
Just as “no one expects the Spanish Inquistion,” very few people expected the way in which consumers use media to have changed so rapidly. Due to this, newspaper companies that bought out smaller chains and leveraged themselves to the hilt to do so are in big trouble. Radio firms did the same thing, not really understanding that while interest in their content has never been stronger, the ways in which that content is consumed is going to require them to change how they sell. That transition is just now happening but the debt obligations are due NOW and the revenue gap is killing them.
Long term plans are a year. Short term is next week. Part of the reason why credit has dried up, in my opinion, is that bankers are adjusting to the reality of uncertainty that those of us in digital have been dealing with for years. Welcome aboard – the water is choppy but the ride is a thrill!