DOWN WITH THE SHIP?

Sinking Feelings...

Happy Sunday War & Peaceniks! Ready for some rough waters? Too late, you’re already in them.

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The US advertising economy contracted for the fifth consecutive month in October. Since the start of 2Q 2022, advertising in the US has averaged -3% growth. As I have been saying, and in case you were still on the fence, we are in an ad recession. Over the summer, the chilling ad economy disproportionally hit the social media platforms. In recent 3Q earnings, it became clear that this Impression Recession had or will spread across all ad supported platforms, with Roku, Meta, Google, Paramount and even Disney and Amazon shifting expectations greatly downward for advertising sales in 4Q and 2023.

Even by those standards, no one attempted to lower expectations more than Warner Brothers Discovery CEO David Zaslav, who combined warnings about a looming recession (which many of his competitors saw coming sooner) with finger-pointing at the former owners of Warner Media for selling him something he didn’t realize was as “messy” as it is. All to explain why Disco Bros lost $2.3 billion in 3Q, $5.3 billion so far in 2022, and why they would miss the 2023 projections that he had overseen creating just months before.

Then over the weekend, The New York Times published this schadenfreude-laden oral history of the “worst merger ever,” AT&T’s bungled acquisition of Time Warner and subsequent unbundling of its TV assets; filled with endless acrimony, numerous scandals, unlimited finger-pointing and zero people taking any responsibility. I summarize and link to the Times piece here; suffice to say the history is told by the winners - meaning rich dudes who got more rich for doing a bunch of deals that wound up historic disasters at worst, and tbd at best.

The guys who lost $109 bil for AT&T got paid. One is still CEO. The guys who sold Time Warner, and knew from the first meetings it wouldn’t work, also got paid, and now get to say “I told you so,” from Malibu. The guy who now runs what’s left, is actively shaving off asset value on a daily basis, while also getting bigly paid.

Meanwhile thousands of people across Warner Media and DirecTV have lost or will lose their jobs, having less to do with how they did them, and everything to do with dick-measuring contests between their bosses’ bosses’ bosses.

A year and a half ago, Scott (Prof) Galloway coined the term Daily Benjamin Burn, as a metric for the number of dollars a CEO set on fire during their tenure at a company. He used his own example when he raised $600M to invest in the NY Times and lost $400K a day; and calculated the DBB for numerous other CEOs, such as Steve Balmer and Jeffrey Katzenberg.

Much is a made in the media about cons like Madoff and fast flameouts like Mayer and Neumann. In reality, the biggest disasters often come from rich, home-grown mogul wannabes like Balmer and Stephenson - both of whom cost their companies and shareholders hundreds of billions with ill-advised and poorly executed overreaches; and cost countless people their livelihoods in the process.

For shits and giggles, I updated Prof Galloway’s chart, adding the new CEO of Disco Bros, as well as my own tenure launching NBCU’s Seeso.

Zaslav’s calculation, albeit very early in his tenure, also takes a conservative view. Since he took over the newly wed businesses, WBD has shed $23 billion in value. If we measured that against his 188 day tenure as CEO, that would be a Daily Benjamin Burn (DBB) of $122 million. For the chart above, I used WBD’s net losses YTD of $5.3 billion (compared to nearly $1b in net profit a year ago), and calculated that across all 270 days of the year through the end of 3Q. Yes, at six months, it is too soon to grade Zaslav against these comps. But with a current $19.5 million DBB, it is not too soon to track WBD against them.

Similarly, while still early in his bird’s flight, we may be seeing the emergence of the all-time champ of cash-burning moguls, at Twitter.

It is hard to say just how many millions Musk has set afire so far, but it’s safe to say that the company was likely not worth the $44 billion he forced himself to pay when he paid it, and that it is almost certainly worth half that (or far less) now. Thus, $22 billion set on fire in 30 days, and a DBB of $733 million. Also, 4,000 people are without jobs. This also does not account for the $140 billion in value his idiocy has erased for Tesla’s shareholders, as he makes $55 billion in compensation as CEO, to spend all his time sleeping at Twitter.

There will be times when circumstances overtake business plans. Recessions are not created by leaders of any one business. But very often significant value, employment and cash are destroyed by a bored or desperate mogul with an unwavering, unstoppable impulse to do, and buy, SOMETHING (regardless of what the data says), before someone (on the board) asks them what the fuck they are doing.

The results are entirely predictable. More than 75% of these mega mergers fail (many of them involving all or parts of Time Warner Media). The lawyers, bankers and execs involved all get richer, regardless of the outcome. And everyone blames everyone else for why it went wrong. Oh, and many completely blameless, uninvolved people always lose their jobs.

There is not much most of us can do to prevent ill-advised, revolving-door deals, nor the indiscriminate damage they tend to create… (Maybe hand out stat sheets on M&A failures at the Allen & Co Su. Valley Vestathon?) But we can prepare ourselves for their inevitable outcomes and wakes.

We can pry the value of our own careers loose from the coffers of the companies named on our business cards; and take more control of our own trajectories. To be blunt, the time to do this is before you need to. But whenever you need to, the best time to start, especially in light of the burning mountain of evidence above, is right the fuck now.

Tomorrow, Monday 11/21 at 4p ET, I will be doing a webinar on mapping out the year(s) ahead in your career, especially as the economy sours and sectors get rocked by deals gone wrong. I’ll discuss taking stock, planning ahead and taking specific actions to survive and thrive what promises to be very rough waters in 2023.

Information for the webinar is below my signature. Premium subs can see it. If you can’t, please consider trying the FREE TRIAL for seven days, joining us tomorrow for the sesh, and then churning out if you hate me.

I hope to see you there. Happy Turkey.

ESHAP