Management gurus and journalists have a habit of ascribing human characteristics to corporations: ‘the sleeping giant,’ ‘the agile start up,’ ‘the strong brand.’ But you hardly ever hear companies described as ‘nerveless,’ or ‘calm’ or ‘wise’. The reason is that they are none of the above and particularly not in the hot house of the media sector.
You might assume that a corporate memory would be an easy attribute to develop; even following rare vicious management culls, there are always some executives left standing who were around when the disaster that lead to the cull happened. You’d think experience would inoculate them against making similar mistakes all over again. You’d think.
Ironically, in the same week Time Warner announced it would either shut or sell for a song the social networking site bebo – that’s the loss making bebo it bought for $850 million in March 2008 — The New York Times web site was carrying a major feature in which former Timer Warner boss Gerald Levin and AOL boss Steve Case fessed up (sort of) to how the two of them had concocted, by their own admission, the ‘worst deal ever’, in the record breaking $350 billion reverse takeover of the asset and history rich content company by the young, asset free, revenue light, strategically challenged AOL.
Behind both deals was panic. A content company – a great content company in many respects, think HBO, Time magazine, Sports Illustrated, Warner Bros – begins to feel a new distribution network is evolving that will, at worst, by-pass its content and go straight to its consumers with alternatives, or, at best, reduce its content margins because it will hold it to ransom with its vast audience. To avoid this scenario it decides it must be ‘a vertical player’ and goes shopping among the top four or five unproven providers of whatever the new unproven ‘wonder network’ is. The result; a bunch of managers and shareholders who never made a dime in the marketplace get mail redirects to the Bahamas (and who can blame them), and The New York Times gets another entry for the worst deal ever shortlist.
I don’t want to be too hard on Time Warner, it’s just it provides a couple of perfect examples of what has happened many times at many companies. If you are a content company or a distribution company you are probably good at doing that thing, but these are different things. Maybe you can bring together two mature finished articles from both sides of the fence and make it work – let’s watch NBC / Comcast – but to believe you can bring up a difficult teenager from the other side of the tracks as one of your own is expensive folly.