Milking the old cash cow

I’ve been thinking about TV Guide and why its drastic overhaul didn’t/couldn’t happen when it should have, 10 years ago — and why similar drastic strategic changes are not happening at other publishing companies today.

It’s because they are cash cows.

TV Guide brought in a helluva lot of cash; it was No. 1 in ad pages, and each page was golden. When I was there, I developed a new magazine, the Parents’ Guide to Children’s Entertainment, because I believed the company had to expand its guide franchise and diversify and because I thought it was a helluva good idea and was needed (it was). We sold 400,000 copies in only two weeks on the newsstand with no promotion but the project was killed. Why? It wasn’t worth the time of TV Guide ad reps to sell $8k pages when they could be selling $80k pages in the main mag. Now the answer to that, of course, would have been to invest in the new products with new staff. But when you work on a cash cow, executives don’t want to spend time raising calves; things need to be big to compete for attention and pay for the big infrastructure. And new = risk. So new things don’t start.

And the answer to the creeping shrinking of the main mag would have been to make radical changes in the product: gutsy changes like the ones TV Guide just made to not only update the product but also cut costs. Some argued in favor of making those changes when I was there, me among them. But inertia and fear and politics and cash won. Strategy didn’t.

Having a cash cow distracts companies from the future. It makes them complacent: ‘Look at all the money (still) rolling in.’ It makes them think that if they just tweak this and that — if they can still get away with raising their rates even as their audience and value are shrinking — they will continue to keep milking cash from that old cow. It makes them overly cautious: ‘Nobody hurt Bessie!’

And politically, the guys in charge of the cow don’t want anybody inside the company competing with them: no new products, no new power centers, no one else to set strategy, no one else to use resources. They win because, of course, they’re the ones bringing in the cash. Nevermind that they’re the ones stopping the company from building for the future. They’ll tell you that’s not their job. They’re there to protect the cow.

Jay Rosen argued in his post about laying newspapers down to die that it is also about draining the value of a company as it declines. In some cases, that’s true. But in some, there isn’t such a sinister or cynical motive; it’s more about blindness, wilfull blindness.

As in the case of TV Guide, change will finally come, but only when it is inevitable, and perhaps when it is too late.

: And that, ladies and gentlemen, is a picture of what life is like in many other big media companies today. That is what is happening on shrinking newspapers, and in shrinking broadcast and even cable networks, and in many a shrinking magazines.

The cash cowherds run the farm, change is resisted, strategic bravery is rarely seen. Why? They still make a lot of money. Yes, but they aren’t growing, not in real terms.

And, worse, the world has changed in this decade in profound ways. There is an entirely new medium competing for attention and dollars. This new medium has devalued what you thought was your core asset — your stranglehold on distribution, your size — and made them into burdens rather than advantages. Your customers, once just a mass, can now talk back and complain. And, most important, in a world where small is the new big, a million small competitors are now enabled to chomp away at your audience, your franchise, your brand, your business, your cash.

Other media companies should look at TV Guide’s saga as instructive and predictive: What happened to the magazine that once sold more copies every year than any other magazine can happen to you.

TV Guide is the cow in the coal mine.