News Corp Split

This week, we heard the news that Rupert Murdoch will be splitting News Corp. into two separate entities: a publishing company and an entertainment firm.   I have several reactions:

1.  The News Corp split follows a familiar pattern.  In the 1990s, we saw a number of media companies engaging a great deal of both horizontal and vertical integration (Viacom merges with CBS, AOL mergers with Time Warner, Disney buys ABC, etc)   Now, we have seen the reversal of many of these strategies.  I'm not surprised.   Disney always had the strongest case for horizontal integration, because they leverage a highly valuable resource (the characters) across many business units.   Other entertainment firms had far less synergy across their businesses. 

2.  One might argue that the media conglomerate phase of the past was a case of herd behavior.  They all imitated one another in strategies of horizontal and vertical integration, without necessarily questioning the merits closely enough.

3.  News Corp may not have a great deal of difficulty breaking up into two firms because of how they manage the business units.  Murdoch always ran the units in a fairly decentralized manner.  That always puzzled me, because it meant that they really weren't pursuing major synergies.  On the other hand, that unit autonomy makes breaking up much easier, given the lack of strong interconnections. 

4.  One wonders how much cross-subsidization occurred in the past, with cash flow from the profitable, but mature publishing businesses to the higher growth entertainment businesses that needed cash to grow.  If a great deal occurred, then it will be interesting to see how the entertainment business funds its growth moving forward.  Meanwhile, investors may be very happy to see the cash flow from the publishing business returned directly to them (perhaps via strong dividends), for people to invest as they choose.

Corporate Social Responsibility: How Do Firms Get Treated By the Press?

Jiao Luo, Stephan Meier, and Felix Oberholzer-Gee have published a new working paper titled, "No News Is Good News: CSR Strategy and Newspaper Coverage of Negative Firm Events."  They test the conventional wisdom that companies with strong corporate social responsibility programs build up lots of good will that can help them in difficult times. They examine firms in the oil industry specifically.  In fact, they find that, "the media far more likely to report accidents if they occur at a company with a superior CSR record. Rather than acting as an effective form of insurance, our results suggest that a strong CSR record can be a liability. Moreover, the tone of coverage is no less critical for organizations with a greener reputation." 

Viral PDFs and a Best-Selling Book: Go the F*** to Sleep

Now here's a Fast Company story that will surprise and delight!  Adam Mansbach has written a humorous "children's book for adults" with the terrific title, "Go the F*** to Sleep."   Mansbach wrote the story after experiencing the frustrations of trying to get his adorable two-year old daughter to sleep.   All parents can relate!   Mansbach's book hit #1 on the Amazon best-seller list this week, and it won't even be released for a few more weeks!  How did this come to be?  Well, a pirated copy in PDF form has been flying around the web.  Tons of people have seen the story, and they found it very humorous.  As a result, a ton of buzz has emerged about the book.  That buzz has now driven the book to the top of Amazon's best-seller list.  Here seems to be a case where a free version of a product has actually helped generate a ton of real revenue.   Perhaps more publishers and media companies will derive lessons from this interesting case.

I'm sure Chris Anderson is smiling right now. Who is Chris Anderson? He's the best-selling author of two terrific books: The Long Tail and Free: The Future of a Radical Price.  In the latter book, Anderson describes how companies can offer free products and services as part of their business model, and yet still derive solid profits for the firm as a whole.   Mansbach's story reminds me of how important it is for all firms, especially media companies, to understand Anderson's compelling case for "free" business models.

Persistent, Redundant Communication Pays Off

Professors Paul M. Leonardi and Elizabeth M. Gerber of Northwestern and Professor Tsedal B. Neeley of Harvard Business School have published an interesting new study in Organization Science. They have found that managers who send a series of redundant messages to team members using multiple media achieve better results. They can actually get projects accomplished more quickly than those who do not use persistent and redundant communication. The paper is titled "How Managers Use Multiple Media: Discrepant Events, Power, and Timing in Redundant Communication."

The authors also found that those managers with less power and formal authority tended to use this strategy of persistence and redundancy more often. Neeley explained to the HBS Working Knowledge blog: "Those without power were much more strategic, much more thoughtful about greasing the wheel to get buy-in and to reinforce the urgency of the previous communication. Managers without authority enroll others to make sense of an issue together and go for a solution."

This paper reminds me of something that the famous cognitive psychologist Howard Gardner once wrote many years ago. He advocated a strategy that he called redescription as an effective means of persuading others. In his book, Changing minds: The art and science of changing our own and other people’s minds, Gardner explained:

“Essentially the same semantic meaning or content, then, can be conveyed by different forms: words, numbers, dramatic renditions, bulleted lists, Cartesian coordinates, or a bar graph… Multiple versions of the same point constitute an extremely powerful way in which to change minds.”