Donald Salter Communications Notes
1) Challenge facing Jim Myers when he becomes CEO in 1991
2) Assessment of the new incentive plan
3) How should business value be calculated/estimated?
4) How do we turnaround this business?
• US recession –> newspaper industry crisis
○ Advertising spending decrease –> revenue decrease
○ Newsprint cost increase
○ –> these two points above leads to eroded margins
• Structural change –> more TV
• Portfolio performance
○ Commercial printing, ok
○ Radio division, negative
○ Colorado Newspaper + Boise, negative
○ Book, negative
• $70 million lawsuit in Texas
• Financial controls
○ Invested in state of the art printing facility ($30 mil.) without any real cost-benefit analysis
○ Buying newsprint at a lower discount than competitors
○ Acquisitions of Colorado Newspaper in 1987 at an “inflated price”
○ Two small newspapers in Idaho operated separately although only 30 miles apart (lack of scale)
○ Performance evaluation/incentives: Short term accounting measures (book value is used)
§ Book value < true MV § Net income not equal to cash flow § Net income can be manipulated • Governance model ○ Stakeholder vs. Shareholder value § Stakeholder: □ Community commitment □ Quality § Shareholder: □ Cost-cutting ○ Family conflicts of interest: § Book value issue

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Portfolio Performance And Structural Change. (April 2, 2021). Retrieved from