Fortune Magazine recently released its annual list of “100 Best Companies to Work For”, and for the third year in a row, not a single traditional media company makes the list. Repeating last year’s honors, Google (NASDAQ:GOOG) again tops this year’s list that seems to contain a wide sampling of all industries including tech, financial services, retail, hotel chains, accounting firms, healthcare, and even homebuilders… pretty much everyone but traditional media and entertainment companies.
I can recall when a career in media used to be cool, and media conglomerates were the companies to work for. When I was in school it was all I could think about doing, and frankly in my mind there was no other option as everything else ran a distant second. I remember struggling to get my big break, and when it finally came along with a 30% pay cut I was thrilled to take it. Unfortunately, today this just isn’t the case with the radio and television industry. Employee morale seems to be in the tank everywhere, and fewer young people aspire to join what’s left of the party. In fact, most of the people I started out in the business have all now left, gone on to become stockbrokers, sell real estate, open businesses… anything other than work in tv and radio.
One could say it’s simply because a shinier, newer toy came along in internet media, but I don’t think that is entirely the case. Google, Yahoo (NASDAQ:YHOO) and Microsoft (NASDAQ:MSFT) aren’t to blame for media’s ills. Television and radio companies used to be home to some of the most creative people around, but today creativity is mostly shunned in these environments. Programming gurus have been replaced by research and formula, on-air talent are highly scripted or altogether voice tracked, sales talent is being replaced by online exchanges, and engineering geniuses are just being phased out as equipment becomes standardized, modular, and disposable. The most ironic change is the fact that marketing positions and general promotion resources have largely been slashed in tv and radio companies that sell the very benefits of marketing and promotion to its own customers.
This is not just a sob story for a lot of unhappy employees, but rather a key element of why many traditional media companies are struggling to find their place in the digital realm where out of the box thinking is vital to stay competitive. When its people are reduced to formula and process, companies are unable to recognize change and adapt. One look at the stock prices of most television and radio companies over the last year demonstrates that the market thinks these companies are in peril. Additionally, because of their financial woes, the first 6 weeks of 2008 have been filled with repeated layoffs across all companies, big and small, television and radio, only furthering the angst within the employee base. There is little room for advancement and growth left in many of these traditional media companies with entrenched senior management driving out the whole next generation of leadership. When there is no loyalty to employees, how can a company expect loyalty back? Again, this bleeds further into loyalty from customers, and ultimately from shareholders. Moreover, what happens to these businesses when the current crop at the top of the corporate structure finally moves on to greener pastures? With a shallow talent pool to draw from for future corporate leadership, the downward financial spiral will only be exacerbated in the television and radio sectors. Is it any wonder shareholders seem to be heading for the doors now?
A lesson could be learned here from the airline industry. Though as an industry it has seen its own share of troubles over the last decade, one name that usually gets pulled out into a separate category by analysts is Southwest Airlines (NYSE:LUV). Its founder, Herb Kelleher, was once called “America’s Best CEO” by Fortune Magazine, and his philosophy with regards to the correlation between employee satisfaction and shareholder value was quite revolutionary.
His comments from an interview he gave to Fortune in its May 2, 1994 issue sum it up best:
When I started out, business school professors liked to pose a conundrum: Which do you put first, your employees, your customers, or your shareholders? As if that were an unanswerable question. My answer was very easy: You put your employees first. If you truly treat your employees that way, they will treat your customers well, your customers will come back, and that’s what makes your shareholders happy. So there is no constituency at war with any other constituency. Ultimately, it’s shareholder value that you’re producing.
Heeding Herb Kelleher’s words, media companies should re-examine the foundation they have laid in their businesses. The over the air signals they once prized are now much less relevant in the digital age where distribution is plentiful to all sorts of devices, wired and wireless, streaming and non-linear in the home, office, car, and just about everywhere else. Driving content to this technology and giving customers the complete interactive experience they desire will take smart, creative people of all disciplines to succeed and satisfy ever increasing consumer demands. With happy, satisfied customers once again these businesses could become growth engines once more fueling shareholder returns and bringing investment back into the space.