The Curse of the Mogul: What's Wrong with the World's Leading Media Companies

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The Curse of the Mogul: What's Wrong with the World's Leading Media Companies Pub. Date: 10/15/2009 Publisher: Penguin Group (USA) Incorporated

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Overview

If Rupert Murdoch and Sumner Redstone are so smart, why are their stocks long-term losers?

We live in the age of Big Media, with the celebrity moguls at the helms of the media conglomerates telling us that "content is king" and "growth is good." But for all the excitement, glamour, drama, and publicity they produce, why can't these moguls and their companies manage to deliver the kind of returns you'd get from closing your eyes and throwing a dart? In The Curse of the Mogul, Jonathan A. Knee, Bruce C. Greenwald, and Ava Seave lay bare the inexcusable financial performance that lies beneath Big Media's false veneer of power.

In an industry built on celebrity, mogul-fueled megalomania has run rampant, with shareholders footing the bill. Moguls have successfully propagated a myth that both makes them appear indispensable to the business and justifies their lousy performance: since they are managers of creative talent and artistic product, being subject to appraisal using traditional strategic, financial, or operational metrics is just unfair, isn't it?

But the stark facts speak for themselves:

?Since 2000, the largest media conglomerates have lost $200 billion in market capitalization from their collective balance sheets-making Citigroup's red ink look like a pale blush.
?These media companies have consistently underperformed for over a generation-not just since the Internet emerged as a competitive force but for the decade before anyone ever heard of "new media."
?Misguided investment and acquisition strategies have created the paradox that, in media, the faster revenues grow, the worse the stocks perform.

By rigorously examining individual media businesses on their own terms, the authors point out the difference between judging a company by how many times it's CEO is seen in Sun Valley and by whether it generates consistently superior profitability. The book is packed with enough sharp-edged data to bring the most high-flying, hot-air-filled mogul balloon crashing down to earth.

Editorial Reviews

Publishers Weekly

The media industry is facing multiple financial and operational crises on an unprecedented scale. Rampant overpaying for acquisitions and “strategic” investments make incompetent corporate leaders as complicit in media's decline as the difficult economy. The authors, professors at the Columbia Business School, focus their sights broadly but home in on the usual suspects—Ted Turner, Rupert Murdoch, Disney and an alphabet of flailing companies (e.g., TBS, CNN, TNT). They discuss the dilemma of new media vs. old, the difficulty of establishing efficient operations, mergers that worked and mergers that didn't, and attempt to debunk any number of media myths, most assiduously the “content is king” platitude—considering especially that the movie, music and book industries are all floundering. An interesting subject in theory, but this treatment has the feeling of a homework assignment rather than an exposé and plods along to its meandering conclusion at a snail's pace. Dull writing and a complete lack of human interest detail make this a tough read and a tougher sell. (Oct.)

Booklist

The authors, academics and consultants, analyze the destruction of value in media conglomerates caused in part by overpaying for acquisitions. In terms of revenue in 2005, we learn that only 4 of the 15 largest U.S. media companies were broadly held public companies that were not under the absolute control or influence of a mogul. Media mogul is "a metaphor for how the industry has been consistently operated and the results it has produced," and the mogul curse is that "with disturbing consistency over time bad (mogul behavior) begins to overwhelm the good." The authors set out to evaluate the media industry, explain why these companies are self-destructive, and offer new strategies. Losers in media companies outnumber winners, and the losers are the "talent"-performers, writers, producers, and the creative executives. The authors conclude with six principles for the good mogul, including focusing on efficiency and concentrating on business challenges rather than seeking diversification in the global arena. This thoughtful analysis of the media business appears to be also a textbook for consulting seminars and required reading for business students.
—Mary Whaley

Product Details

ISBN-13: 9781591842644
Publisher: Penguin Group (USA) Incorporated
Publication date: 10/15/2009
Pages: 320
Product dimensions: 6.34 (w) x 9.28 (h) x 1.08 (d)

Meet the Author

Bruce Greenwald is the Robert Heilbrun Professor of Economics at Columbia University Business School, where his class on strategy draws standing-room-only crowds.

Acknowledgments vii

Introduction: The Curse of the Mogul 1

Part I The Framework

1 The Media Landscape 13

2 The Landscape of Competitive Advantage 33

3 The Structure of Media Industries 57

4 Debunking Media Myths 67

5 The Internet Is Not Your Friend 81

Part II The Segments and the Strategies

6 Content Is Not King: Movies, Music, and Books 105

7 Efficient Operations in Media: Do You Think I'm Sexy? 123

8 Putting It All Together: Networks and Databases 141

9 Managing Competition in Media: Can't We All Just Get Along? 159

10 All (Profitable) Media Is Local: Newspapers, Theaters, and Communications 173

11 Reinforcing Competitive Advantage in Media 189

Part III Good Mogul/Bad Mogul: The Sources of Success and Failure

12 Bad Mogul: Media Mergers and Acquisitions 205

13 Media M&A That Works: One That Happened and One That Didn't 233

14 Good Mogul: The Outperformers 241

Epilogue: The Future of Media: The End of the Curse? 257

Postscript 269

Notes 277

Index 301

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Bastwick

Posted December 19, 2009

Investors beware - the media-mogul has your money!

And Rupert Murdoch is not the worst - indeed, has some "good mogul" potential (but watch out for his successor moguls!). We are beguiled by the iconic names of media mega-companies and the moguls who run them. The moguls' initial inspiration and drive founded and built iconic businesses - names we are all familiar with. But like conquerors of yore, who built empires initially for economic reasons, megalomania takes over from business sense and empire-building becomes the end in itself. Personal aggrandisement and conviction in the infallibility of his business acumen leads the mogul to make irrational business mergers and other deals on a monumental scale, with economically disastrous results. How does he do this, and how are the disasters disguised from Joe Public? He uses your (investors') money as though it were his own, and publicity waffle about "synergy" etc as though the words themselves had value. The eventual fall of a mogul may produce a frisson of pleasure, but meanwhile the returns on investment are appalling. You have been warned! This lively and entertaining book is an eye-opener for all. The specialist can study the tables and figures - the rest of us can skim over those and enjoy the shock-horror of it all.
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PeteAtBaN

Posted November 14, 2009

more from this reviewer

Great book on the media industry and how it needs to change

For those interested or involved in the media industry this book makes for a compelling read.

It aims to provide some "guidelines" for the media industry, by surveying the industry over the last few decades. From interesting anecdotes to detailed analysis, it makes for easy, light reading and builds a strong case for their key points. What's most interesting is that their analysis indicates that conventional wisdom in the media industry is all wrong.

Whether you agree with their views or not, this book will definitely ask you to think some more about the media industry and the moguls that run it.
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Posted October 5, 2011

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Posted December 12, 2009

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