How to Survive Media’s Perfect Storm!

An article from Mediaweek UK.  written by a couple fo corporate recovery specialists.  The article outlines the actions that media companies need to undertake to survive fragmentation and falling ad revenues.

Financial

1) Make sure your operational and financial performance measures are properly aligned and timely so the right operational levers can be quickly pulled if financial performance dips. Crucially, ensure everybody in the business understands how the company makes a profit.

2) Stress-test your short, medium and long-term financial forecasts against adverse scenarios such as a double-dip recession or fluctuations in borrowing rates. Establish where the risks lie, develop an action plan to minimise the risk of them happening and devise a contingency plan to deal with uncontrollable risks.

3) Cash is king: get to grips quickly with anticipated periods of short-term cash flow. Build a 13-week cashflow forecast (daily if possible for the first four weeks) supported by an action plan to increase cash reserves.

4) Understand how new projects or large sales opportunities will affect your cash flow – ensure they do not jeopardise the viability of the business as a whole.

5) Analyse income streams to establish the real drivers of revenues. Digital delivery, combined with interactive navigation, means that audience habits can increasingly be measured and tracked in real-time. If you cannot offer this service, you will be marginalised when your customers start demanding it.

Operational

6) It is imperative to manage your cost-base in line with lower revenues while meeting customers’ changing demands. For example, moving to user-generated content with strong editorial control.

7) Streamline manufacturing and supply/delivery chains; it is essential to run a tight ship on your core operations.

Strategic

8.) Focus on your business’s core strength in relation to today’s value chain. Play Devil’s advocate by asking yourself: “What could a reduction in the number of players in my supply chain do to my business model and profitability?”

9) Know your customers: how they interact with content and their expectations of quality, delivery channels and price-points may all change.

10) Work out how the shift in emphasis from content and copyright ownership to distribution capabilities affects your business.

Finally, and perhaps most importantly, understand which business lines and which customers (or customer groups) are the most profitable.

Developing a clean financial and operational baseline – the unbiased ‘single truth’ of what kind of a business you have right now – can often be the single most revealing piece of analysis a business can undertake.

Giving timely, robust and insightful information to a good management team is often the first step in making the decision that is most right for your business.

Fraser Parker & Paul Gilbert are senior directors in the performance improvement practice of Alvarez & Marsal, the global professional services and corporate turnaround firm

Full Article here

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