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The private sector myth

Government agencies are always beaten over the head with, 'why don't you do it more like the private sector.' It is a criticism that is largely unfair, in my experience, especially on important things such as sharing information and having various parts of an organization work together in support of a common mission. Jim Flyzik always notes that when they talk about this mythical 'private sector,' they are often talking about the best of the best, but government organizations also have top performers yet they often treat the government as one single entity.

Anyway, there was a case in point in Saturday's WSJ in a wonderful media story about corporate giant Viacom.

CBS and Viacom Find Life Tough After the Big Split [WSJ, 7.22.2006]
The break-up of Viacom seemed to signal the start of a sweeping change in entertainment, but the media giant's experience suggests that there are no easy solutions to the challenges posed by the Internet and other technologies.

The WSJ requires a subcription, but for a limited time, you can read the story here if you don't subcribe.

Viacom recently decided that it was better to be two companies rather than a single, giant company, so it broke in two. One part was led by the CBS television network. The other was largely made up of Viacom's substantial cable properties, which include such household names as MTV and Comedy Central.

As a media watcher, it has been a fascinating situation to watch. Everybody guessed that the new cable company would outperform the network company, but the cable company has run up against this little thing called the Internet, which has been drawing advertising dollars away from its cash cows.

A raft of Web sites such as YouTube and Grouper, popular with kids and teenagers who are key to Nickelodeon and MTV, has tarnished cable's main allure to advertisers: the ability to deliver narrowly defined audiences. Online startup costs are so low that virtually anyone can start a site. Contrary to conventional wisdom, it's the broadcast networks, with big-ticket events such as the Super Bowl and "American Idol," which appear to have the advantage.

But the two companies... well, they just don't seem to like each other that much. There is a fairly intense rivalry. Take this bit from the WSJ article:

The friction manifested itself on the Paramount lot in Los Angeles. The decision to divide the studio's film and TV businesses had created a headache for employees. Paramount TV employees lost their discount on DVDs at the company store as well as their gym discount. They were told they needed new identification credentials to be on the lot. Not long afterward, CBS moved Paramount Television to property it owns in Studio City, Calif.

Viacom says the changes on the lot were necessary because the CBS employees no longer worked for the studio.

It good these folks aren't in charge of, say, securing the homeland.

One other aside from a media perspective: The NYT on Saturday also ran a story about Viacom. My guess is it was the release of the company's earnings, but it is always interesting when that happens.

Posted by Christopher Dorobek on Jul 25, 2006 at 12:15 PM


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