Family owned and controlled businesses face challenges because of difficulties in passing firms on to succeeding generations of the family. Tax issues are a common problem, but the biggest challenges involve finding effective managers among the family and the needs for new capital that diminishes family control.
How family members view the company over time create problems for sustainability. Individuals who establish firms tend to view it as a business enterprise; their children tend to see it as supporting the family; and multigenerational family businesses tend see it has providing status in the community. These latter priorities can interfere with profit and reinvestment objectives and endanger long-term sustainability.
As a consequence of these kinds of factors, only about 30% of family firms are passed to a second generation and only 13% reach a third generation.
This brings us to the challenges facing media firms. Three big companies—News Corp., Viacom, and New York Times Co.— all are struggling with succession and control issues.
Rupert Murdoch, who built the News Corp. global empire after inheriting the firm from his father, is now 77 and having difficultly convincing an heir to take over. The oldest son, Lachlan, left the company three years ago and his other children, James and Elizabeth, recently declined to become his number 2. James still runs the company’s European and Asian operations, but Elizabeth prefers to run her own independent TV production company. Whether the company can remain family run in the coming years is unclear.
Sumner Redstone—who is 75 and has had strategic disagreements with many managers at Viacom—turned to his daughter Shari Redstone to help manage National Amusements, Viacom and CBS. She proved quite adept and by 2005 it was assumed that she would succeed Sumner as head of the company. The two had a serious falling out two years ago over succession and governance, however, and it is now uncertain who will lead the firm in the future. Certainly it won’t be Sumner’s son Brent, who sued him over disputes about his portion of the family business.
The Sulzberger family is struggling to maintain control over the strategic direction and operation of New York Times Co., despite the greater influence they have because of that companies preferential share structure. They increasingly have to go outside the company for capital—such as making the deal with Mexican mogul Carlos Slim—and they are continuing struggling with other major investors who are demanding more influence on company management. The family is slowly losing the automony it once had in running the company.
If solutions to succession and family control issues are not found, it is likely that these firms may have to turn to outside managers. History has show that when that occurs, family members become detached from the firm and are more likely to sell their shares and leave the business altogether.
Blog Archive
Popular Posts
-
I was just blown away when I saw the front page of Inside Radio Friday in which they described the results of their special survey on voice...
-
With the NCAA's March Madness annual collegiate basketball frenzy underway, I see too many parallels to the music media business to not ...
-
The U.S. Supreme Court has agreed to hear a case concerning vulgarity on the airwaves -- you know, Bono using the F-word in an unscripted br...
-
By Jerry Del Colliano There is a military term for a situation caused by too many inept officers -- clustering -- referring to the insignia ...
-
It's hard to fathom that a consumer electronic device that is both so cool and so hot may have finally peaked. In my work with college s...
-
The introduction and suspension of media services is becoming a regular occurrence and the combined effects of multiple false starts is crea...
-
All too often lately the major broadcast groups have been firing able and talented people to save money. Last week CBS pulled off a double f...
-
Clear Channel went private yesterday at long last. Thomas H. Lee Partners and Bain Capital Partners are in charge now. They are investment ...
-
The Big Trend: Social Networking Not just Facebook and MySpace. The concept of building a social network around almost anything and having...
-
Well, I guess that settles that. There is no self-censorship in the Fiji news media, according to CFL. At least that’s the conclusion they...