Teaching Examples

Covering the facts about Web losses
June 25, 2006, 3:37 pm
Filed under: Uncategorized

I don’t mean to imply that anyone’s doing anything underhanded — it’s all just business as usual, as made clear by Richard Siklos in this New York Times story:

… given how much the Internet has already transformed the media and society, it’s surprising how little money traditional media companies make directly from it.

Don’t take my word for it. Flip through the financial statements of some of the biggest names to see what they say about their Web sales and profits. You won’t find separately broken-out figures at Disney, Viacom, or Time Warner (aside from AOL).

Even at the News Corporation, the combined Internet operations, including the increasingly popular MySpace, don’t merit being listed separately on the income statement. Rather, the company focuses on seven somewhat old-fashioned “industry segments,” including cable network programming, television, newspapers and filmed entertainment. Online activities are lumped into a category called “other,” which includes billboard companies in Russia and Eastern Europe, a record label in New Zealand, an Israeli technology company and a business that owns the broadcast and sponsorship rights to the 2007 Cricket World Cup.

Source: “Waiting for the Dough on the Web,” June 25, 2006

I remember digging into several media corporations’ annual reports back in 1998 and 1999, when I worked at the American Press Institute, and finding this same interesting lack of concrete information about the online profits and losses. I wanted to compare numbers for Gannett, Knight Ridder, and The New York Times Co., as I recall — and none of them had broken out any figures for their online properties.

So nowadays, when so many media companies proudly claim to be “in the black” with their online operations, I can’t help feeling skeptical. They never told shareholders how much they had invested in schemes like CD-ROM companies and television partnerships, how much they lost as they expanded and hired overpriced executives who knew little or nothing about online users, and bought poorly designed software systems to funnel content from the print side to the Web. Then they turn around and claim they are making tidy profits. It’s all a black box — no details.

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