Shareholder Value

wall streetIt looks like we are only at the beginning of a large and rapid consolidation of local television station ownership.

There has been a lot of comment about what is actually an urban legend, that companies are somehow “required” to “maximize shareholder value”.  There is no requirement and this article in Forbes excellently explains where the legend came from.

No mention of weather…but it is “required” reading.

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About Kevin Selle

Chief Meteorologist, KFDX-TV. Co-host, WeatherBrains.
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2 Responses to Shareholder Value

  1. Jim Marusak says:

    There may be the sentiment that bigger is better. But if you look at the case of Clear Channel, they’re about to fall apart because they got too big, made their properties nowhere near as palatable in order to maximize profit in the short term, and now are probably going to default on their corporate bonds sometime later next year, as their value is more than the total of their physical assets, and they really can’t cut expenses any more.

    As for TV, the same collapse will be coming soon, given how the cable companies are slowly starting to lose their revenues via the internet and people cutting the cord. The consolidation is a quick short-term way to make the balance sheet look better. But in the longer term, unless the cable and phone companies curtail internet usage via download/upload caps, the major networks and the cable companies will lose more from their advertising then they might in internet revenues. And while the short-term wealth of the cable and tv companies might look good, that could end up costing Americans a lot. Not just in lost cash, but also in increasing the digital divide (less bandwidth = less chances for things like working from home and even learning from home), and maybe even stifling meteorology (because whether we like it or not a lot of the weather data we use as meteorologists comes over that same internet, and as a fellow met let’s face it some of the files are a lot larger than most files on the net).

    So I see this consolidation as a short-term thing, to be spun back off in a few years because the combined companies become unstable and have to spin off or just go extinct (like GMAC, Chase, and GS among others should have in 2008).

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