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Zero Hour for Media Leaders

Last week, we honored 12 leaders of the television industry at the 18th annual Broadcasting & Cable Hall of Fame gala at a jam-packed Waldorf-Astoria ballroom in New York.

Such a marquee event, celebrating a star-studded list of dignitaries and their accomplishments, gave us a chance to close the doors and bask for a few hours in success stories, and forget about all the grueling times that look to be ahead for the foreseeable future.

From building businesses out of nothing, to elevating established brands to new levels, our honorees have consistently displayed the ability to blaze trails in their line of work. But we are now entering—or, more accurately, have been violently thrown headfirst into—a decidedly bleak curve in the economic cycle. This is the time when I am most interested to see who the industry's leaders really are.

It is when times are toughest that true management is tested, and we are about to find out who can demonstrate that rare combination of visionary leadership and flawless execution, to not only weather the storm but be positioned to come out, guns blazing, when the clouds clear.

One cable network chief summed it up perfectly last week. “Anyone can be a star when there is money flying around everywhere,” he told me. “Now we are going to see who the real stars are.”

As many of us in the media industry are calibrating and re-calibrating our 2009 budgets, we aren't trimming so much as orchestrating mass slashings, like the director of a horror movie. Wes Craven could get a job right now as a CFO at pretty much any media company.

Some media companies are coming out right away and announcing big budget cuts. NBC called for $500 million and Yahoo is eyeing $400 million. Others including CBS, Viacom and News Corp. are all warning of the effects of the slowdown.

Right now is as good a time as any to be announcing moves, as you get pelted less when it's raining on everyone.

I'm sure plenty of other companies are quietly ramping up to do the same. For instance, the head of another major cable network last week quietly told one of my colleagues they were eyeing budget reductions in the realm of 20%.

With consumer confidence shredded on many levels, the trickle-down will hammer the media industry for the time being. As one exec told me recently, it won't matter as much if more people stay home and watch television if the networks can't fully monetize that.

Anyone with an M.B.A. can come into a company and slash budgets. That's easy. Now is the time when strategic vision will be tested. As these cuts are made, whether it is just marketing budgets or personnel or even shuttering full business units, how will this leave a company positioned on the other side?

This is where the leadership comes in.

The obvious risk is to cut to the point that you damage your brand equity, and bleed market share to the extent that when the economy bounces back, you don't have what it takes to recover.

Conversely, it will be interesting to see if some companies choose to be bold in this environment, especially from an acquisition standpoint—whether it is snatching up programming properties or buying businesses. Obviously that's easier said than done.

But a company like Disney may try to overpay for properties like college football's Bowl Championship Series or even the Olympics for its ESPN and ABC networks. Those would be smart moves taking major assets from Fox and NBC, respectively, and locking up valuable (and relatively TiVo-proof) properties for years to come. Downturns are when you can step on the throat of the competition.

The best answer is obviously somewhere in the middle, and this is where the people running media companies of any size right now will be tested. We are about to find out which media moguls truly have Hall of Fame credentials.

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