The weird concept of diversification in media
Shashikant raises some interesting questions about BCCL’s investments in companies whose interests span a really wide spectrum. While the Times Group gets a lot of flak for doing things don’t exactly enhance its integrity, the practice is more widespread than anyone would ever like to admit. Most media companies these days take the ‘barter’ route for a variety of deals and it is not an unknown thing to include media exposure as a part of the deal.
But what I actually wanted to write about was not the shady parts of the media landscape. I don’t have any illusions about it, so I accept it pretty much as part of something that comes with the territory. The problem for most media organisations, especially for the successful ones, is to somehow stick on to the growth path even after they’ve been on top for a long time.
After a certain point in growth, you don’t get single or double digit figures quarter-on-quarter. The advertising money and circulation/viewership start flatlining and no additional amount of money you can throw at the problem will fix it, because there’s just no growth opportunity left for that particular product, other than stupid silly strategies like throwing bundles of newspapers in the rubbish bin or giving them away for free at toll-booths. At the same time, especially for a publicly listed company, you need to show growth, or at least intent to grow to keep the investors happy, the media buzzing/guessing. How in the world do you do that?
So they end up starting newfangled companies to diversify their interests, most of the time within the sector, but at times outside the sector too, for lack of viable investments within the home territory. It is strange, but there is no other way to look at it other than to think of the company as a very weird mutual fund in such circumstances. How else do you explain a media company investing in the airline business, garment retailing etc?