Magazine article Marketing

Time to Be Grateful for Stability of Traditional Media Franchises. (Opinion)

Magazine article Marketing

Time to Be Grateful for Stability of Traditional Media Franchises. (Opinion)

Article excerpt

Truly extraordinary things are happening to businesses -- even those not called Enron, who have employed dodgy dealers or have spent too much on the net.

In UK communications the saddest plight of all is the fate of Energis, the telecommunications firm that grew out of the National Grid and was able to piggy-back on its power lines with the latest technology. When it floated on the stock market it seemed its time had come.

Despite being well run, it has come a cropper due to over-optimism and over-capacity in the market. Energis' share price, which once stood at more than 700p, has now sunk to 3p. Some analysts think that even this valuation is too rich and that the true value of Energis is much closer to zero.

Similar catastrophic signs can be seen in the current state of the Kirch Group in Germany. Here the cause is not over-capacity in the market, but the advertising recession, combined with borrowing to fund sports rights such as Formula One and to pour money into the bottomless pit of the German pay-TV market.

In the case of Kirch the problems have been compounded by the generosity of giving rivals and potential rivals such as Axel Springer and BSkyB incredible insurance policies. If they don't like their investments -- which they don't--they have the right to sell them back to Kirch at a previously agreed price.

Energis is racing to find anyone who will save it from the knacker's yard, while Kirch is trying to sell off enough bits of the company to stave off bankruptcy. …

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