sutton049

The current dispute over Sumner Redstone’s competency to make decisions regarding his firms is pitting company executives against family members and family members against each other, diverting significant attention from running the companies and revealing the challenges of governing a firm as its founder ages. Redstone, who is now 92 and allegedly mentally incapacitated, had for many years planned his estate. He created a family trust that would take control over National Amusements after his death. National Amusements holds controlling interest in companies such as Viacom, CBS, Paramount Studios, Comedy Central and Nickelodeon. In recent months Redstone suddenly altered his will and estate gift plan and changed the trustees of the Redstone trust and the members of the Viacom board. This provoked a corporate and family drama about whether he is capable of making the changes or is being manipulated by his daughter Shari Redstone, who serves as President of National Amusements and vice...

The sales of the Washington Post to Jeff Bezos and the Boston Globe to John Henry raise the question why people would want to own newspapers if they aren’t doing so for obvious financial gain.   There are clearly people who want to own papers for political purposes so they can directly influence debate and policy.   This is certainly the case for the ultra-conservative Koch brothers, who have been trying to buy the Los Angeles Times  this past year. But Bezos and Henry don't seem to fit that mold.   Bezos’ purposes for buying the Post are not the pursuit of profit. He certainly would produce better returns putting more effort into Amazon or another commercial firm. John Henry can expect far more returns from effort in his investment firm or his sports empire than the Globe . So why are they buying legacy media?    The answers lie in human traits.   All of us need diversions. We need toys to play with; things to spark our interest and ...

The proposed merger between Bell Canada Enterprises and Astral Media will shortly be considered by the Canadian Radio and Television Council (CTRC). The merged company will own 70 television and cable channels, more than 100 radio stations, and some of the country’s most popular websites. The combined company will serve nearly one-third of the national TV audience, more than 40 percent of the national cable TV audience, and about 30 percent of the nationwide radio audience. In addition the merger will increase Bell’s vertical integration and its power over distribution systems used by competitors. This later factor is particularly important because Canada lacks much of the regulatory control seen in Europe and the US over business practices of distribution systems that are also used by competing firms. The merger will benefit the two companies by giving them more market power and permitting efficiencies at the corporate and divisional levels. It is also likely to produce efficienc...

I was recently reviewing the effectiveness of media ownership policies and regulations and was struck by the limited success they have achieved during the past 50 years in Western nations. There seem to be two central problems with ownership regulation efforts: ownership really is not the issue that we are trying to address through policy and we have convoluted views of ownership. Media ownership is not really what concerns us, but is a proxy of other concerns. What we are really worried about is interference with democratic processes, manipulation of the flow of news and information, powerful interests controlling public conversation, exclusion of voices from public debate, and the use of market power to mistreat consumers. It is thus the behavior of some of those who own media rather than the ownership form or extent of ownership that really concerns us. This is compounded because media practitioners, scholars, and social critics have highly convoluted views about ownershi...

Efforts to professionalize journalism began early in the twentieth century as a response to the hyper commercialization of newspapers and the “anything goes” approach to news that emerged in the late nineteenth century as a means of increasing street sales through sensationalism, twisting the truth, and outright lies. The impetus for journalistic professionalism originated among publishers who wish to counter the trend and it gained support of journalists who saw it as a means of improving their working conditions and social standing. Journalism training and higher education programs, professional societies for journalists and editors, and codes of ethics and conduct emerged as part of professionalism. These promoted the core values of accuracy, fairness, completeness, and the pursuit of truth. These efforts improved industry practices, pushed out the worst journalists and publishers, and creating some trust in the content of news. They also created environments in which advertisers we...

Many journalists pursuing new online initiatives are learning that good intentions are not enough for providing news. The latest group to do so is former Rocky Mountain News reporters who started rockymountainindependent.com this past summer using a membership payment and advertising model. The effort collapsed Oct. 4 with them telling readers, “We put everything into producing content and supporting our independent partners, but we can no longer afford to produce enough content to justify the membership.” There problem is hardly unique. The conundrum facing many journalists is whether to pursue the noble work of journalism as unpaid charitable work or to become engaged as journalistic entrepreneurs with a serious attitude toward its business issues—something many despised in their former employers. If journalists want pay for their work, if they want to provide for their families, and if they want to pay mortgages, they need to spend more time figuring out how to provide value that wi...

The push for government support for newspaper continues and this week publishers and their supporters—including the Newspaper Association of America—went before the House Joint Economic Committee detailing how the current economic climate has harmed their finances and arguing for preferential changes to tax and pension laws. They asked to be allowed to extend application of the net operating loss provisions from 2 years to 5 years and for changes in laws to allow them to underfund pension funds for a greater period of time. Both would improve their operating performance and balance sheets. This is a case of the newspaper industry seeking long-term business benefits to solve a short-term crisis caused by poor management decisions and the recession. The leading newspaper firms and their representatives are making concerted efforts to dupe legislators and the public into believing their troubles are part of the general trends in the industry, rather than the result of management decisions...

The Newspaper Revitalization Act introduced by Sen. Benjamin Cardin, D-Md., would permit newspapers to operate as not-for-profit entities under the tax code and is being heralded by some observers as a means of saving newspapers, much as was the Newspaper Preservation Act of 1970. Good purposes aside, it is useful to study the act to determine whether it will actually accomplish the goals that are stated as its rationale. The bill is a small bill, about 435 words, that would amend the IRS Code of 1986 to permit newspapers to be given 501(c)(3) status, thus obtaining tax exempt status and the ability to accept charitable contributions. Currently tax laws do not permit newspapers to be operated tax exempt, but they do have mechanisms that permit foundations to own them or support them financially. Paragraph (b)(1) of the bill would allow general circulation newspapers “publishing on a regular basis” to establish themselves as tax exempt organizations. The language does not limit periodic...

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.— a...