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Big Media Trends: Is Smaller Better?
In a bid to become, leaner, meaner and more responsive to the fast-paced world of the Internet, a few big media firms have resorted to breaking apart so they can better compete. Sumner Redstone is splitting Viacom into two, Carl Icahn is threatening the Time Warner board into dividing the company into four, and there have been suggestions that large shareholders would like to see a similar slimming-down at News Corp.
However, Diane Mermigas of The Hollywood Reporter suggests that the ability of a large corporation to bravely enter new territory has less to do with size than it does with strong leadership and efficient management. Many large media firms have watched their stock prices sink this year due to waning investor confidence in big media's ability to adapt, but Mermigas says the main culprit is not size; rather, she says, bulky infrastructures and legacy management are what's slowing these firms down
In some instances, a sale or spinoff of assets could result in higher operational costs, leaving these firms worse off than before, in dire need of strategic alliances. Often, she says, smaller is not better; in fact, smaller firms often look to become bigger. It will be interesting to see how the Viacom split, which is scheduled to be complete by the end of the month, plays out. This week, the stock market gets its first chance to trade shares of the new Viacom and CBS Corp.
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posted by Unknown @ Wednesday, December 07, 2005,
