Monday, 8 December 2008

Hollywood Babble On & On #200: Fish Rots At The Head First

It's my 200th edition of Hollywood Babble On & On, and I'm going to start it with something I never thought I would say:

God bless Barry Diller.

The former network and studio mogul is taking big business, and Hollywood to task, scolding profitable companies for lay-offs and contributing to unemployment. Here's the money quote:
“The idea of a company that’s earning money, not losing money, that’s not, let’s say ‘industrially endangered,’ to have just cutbacks so they can earn another $12 million or $20 million or $40 million in a year where no one’s counting is really a horrible act when you think about it on every level. First of all, it’s certainly not necessary. It’s doing it at the worst time. It’s throwing people out to a larger, what is inevitably a larger unemployment heap for frankly no good reason.”
Now the key words here are no good reason, because there is a reason for profitable companies to do layoffs, but it is not a good reason, it is a terrible reason.

That reason is usually the CEO.

Right now the economy is in turmoil. Marked to market accounting rules are artificially depressing the values of assets, which is bringing stock prices down, no matter how healthy the company's cash flow is. Laying off a bunch of people means a temporary savings in how much money is going out, that savings causes a one day, two point rise in the company's stock price, defying the expectations of know-nothing analysts, and thus justifying the CEO getting a bigger bonus than he got last year.

I agree with Diller, I have nothing against people making as much money as they can.

However, there is a difference between making money, and just taking money. You make money when you work hard to create profits for all involved. You take money when you go the easy route of needless layoffs in order to feather your own nest.

If you want to make a lot of money, the good luck to you, but if all you want to do is take it, then you are not only a lousy person, you are also a lousy businessperson. Just look at how Hollywood is run these days, financiers are getting pissed, shareholders aren't seeing any dividends, audiences are dropping off, costs are skyrocketing, and profit margins are dwindling down to nothing.

In fact, it seems that only the top management seems to profit anymore.

That's not right.

The purpose of capitalism is that both sides in any deal, buyer/seller, investor/entrepreneur, management/labour, walk away from that deal happy. As long as both sides are basing their decisions on rational principals, and not childish and petty greed, there is always a way for both to get what they want.

However modern business, especially Hollywood, is in the grips of people who don't seem to believe that anyone should be happy about any business getting done, and hence, no business gets done, and everybody feels screwed.

Even the CEOs who are currently raking in the big bucks are merely setting themselves up for a major fall. Things are coming to a head, a perfect storm is coming to lay everything to wrack and ruin on a scale that makes the 1948 Consent Decree look like a traffic ticket.

And the only ones the CEOs can blame for it will be themselves.

Like any good Jeremiad there is always a way out, to repent sins, and to go forth, doing business to create, instead of destroy, but it's highly unlikely that anyone is listening.

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