How valuable is is to have assets over a variety of businesses? Do economies of scale and especially scope really exist? I think it is interesting what is happening this week.
Previously I blogged about IAC breaking up- essentially this is a vote for "yes" and a vote for "no" because the breakup into five separate companies suggests that the value of the parts individually is higher than the value of the whole. Barry Diller also said that IAC
needed [the transactional businesses like Ticketmaster] earnings to allow us to invest in emerging Internet businesses. Now that we have real scale in the pure Internet units, it makes nothing but sense to me to reorganize the whole.
So essentially, having TV, internet, real estate, and retail assets all together under one roof wasn't maximizing shareholder value after all.
What are other firms doing? Try GE. General Electric's NBC Universal unveiled a sweeping campaign last night during the Sunday Night Football broadcast of the Eagles-Cowboys game aimed at "entertaining, informing and empowering Americans to lead greener lives." But was anyone watching?
I would be surprised if this was not one of the top games in ratings this season. The campaign, NBC Green is Universal, will turn the NBC logo on virtually all of its TV channels (cable and broadcast) Internet properties(excluding MSNBC), green for one week to coincide with eco-awareness programming. I don;t know what Matt Lauer was doing near the arctic circle, but apparently the earth is getting warmer :) It's "Green Week" at Claire's high school on Heroes.
The models on Deal or No Deal will be wearing recycled parachutes. Jay Leno shows you how to clean a green sink in an eco-friendly way. Even as CNBC was reporting that Citigroup stock was probably headed lower, there was Eco-Awareness brought to you by NBCU. GE announced this on October 23, apparently.
It's going to be hard to avoid all of this, as NBC is everywhere, but I think the only thing this proves is unified campaign launches across platforms can be done well, with the added benefit that we decide to tell all our bosses to buy that $2,000,000 GE HVAC unit for the office park because it's 20% more efficient and uses 16% renewable resources (i made those figures up- all of them). GE named Ann Klee Vice President for Environmental Programs today! All this seems more to be happening for corporate PR value and brand equity than any DR/commerce advertising.
Times are just as challenging for other large media companies. The AOL/TW merger never produced the kinds of scale and scope ecomies and leverage promised to investors. Viacom spun off CBS radio in an apparent loss of faith in the radio business's fit with its other assets.
Maybe all of these are examples of businesses with strong positions but weak strategic frameworks. Are software/tech companies like Microsoft and Google doing this better than others? In some sense, it seems like their model isn;t much different- using a cash cow (Windows OS/office software for Microsoft, search for Google) to lever into other lines of business. Time will tell.