Saturday, February 28, 2009


Family owned and controlled businesses face challenges because of difficulties in passing firms on to succeeding generations of the family. Tax issues are a common problem, but the biggest challenges involve finding effective managers among the family and the needs for new capital that diminishes family control.

How family members view the company over time create problems for sustainability. Individuals who establish firms tend to view it as a business enterprise; their children tend to see it as supporting the family; and multigenerational family businesses tend see it has providing status in the community. These latter priorities can interfere with profit and reinvestment objectives and endanger long-term sustainability.

As a consequence of these kinds of factors, only about 30% of family firms are passed to a second generation and only 13% reach a third generation.

This brings us to the challenges facing media firms. Three big companies—News Corp., Viacom, and New York Times Co.— all are struggling with succession and control issues.

Rupert Murdoch, who built the News Corp. global empire after inheriting the firm from his father, is now 77 and having difficultly convincing an heir to take over. The oldest son, Lachlan, left the company three years ago and his other children, James and Elizabeth, recently declined to become his number 2. James still runs the company’s European and Asian operations, but Elizabeth prefers to run her own independent TV production company. Whether the company can remain family run in the coming years is unclear.

Sumner Redstone—who is 75 and has had strategic disagreements with many managers at Viacom—turned to his daughter Shari Redstone to help manage National Amusements, Viacom and CBS. She proved quite adept and by 2005 it was assumed that she would succeed Sumner as head of the company. The two had a serious falling out two years ago over succession and governance, however, and it is now uncertain who will lead the firm in the future. Certainly it won’t be Sumner’s son Brent, who sued him over disputes about his portion of the family business.

The Sulzberger family is struggling to maintain control over the strategic direction and operation of New York Times Co., despite the greater influence they have because of that companies preferential share structure. They increasingly have to go outside the company for capital—such as making the deal with Mexican mogul Carlos Slim—and they are continuing struggling with other major investors who are demanding more influence on company management. The family is slowly losing the automony it once had in running the company.

If solutions to succession and family control issues are not found, it is likely that these firms may have to turn to outside managers. History has show that when that occurs, family members become detached from the firm and are more likely to sell their shares and leave the business altogether.

Thursday, February 19, 2009

Why We Won't Pay for News

I recently forged my way the myriad of news reports on networks, papers, and web sites and discovered lots of attention-grabbing stories:
  • Reuters had a story about the death of Mickey Rourke’ 18-year-old pet chihuahua.
  • CBS News reported on cart that transforms into a sleeping tent for the homeless.
  • Associated Press told me that Twitter was limiting message length and intending to start testing ways to make money.
  • The New York Times informed me about people walking and running in stairwells as a means of keeping fit.
  • CNN reported that Lance Armstrong’s stolen bicycle had been recovered.
  • The Los Angeles Times reported on a city council candidate criticizing a rival for being defense attorney that represented a client who was accused of shooting a sea lion four years ago.
  • ABC News carried a story on its website about efforts to produce cola containing cow urine in India.
  • MSNBC reported that Starbucks is increasing the products its offers in offers as part of an effort to improve its performance.

Interesting? Yes. Significant? Hardly. Economically valuable enough to get people to pay for the news? Never.

Therein lies the problem. Most news organizations are still stuck in the get-the-attention-of-audiences, entertain-them-with-some-news-in-hopes-they-will-attend-to-serious-news-that advertisers-pay-for mode. They complain about declining audiences and use of news, but they are doing little to add value that makes it worth consumers paying for it themselves or spending time with it.

News as commodity; news for the masses; news that is fleeting; news that doesn’t provide significant intrinsic and extrinsic value will never induce readers, viewers, and listeners to pay for it. We are already paying what it is worth—little or nothing.