2

“The decline in value [of most companies within the media industry] has been due primarily to the poor business fundamentals that now plague the industry: flat or declining revenues in most sectors, highly leveraged balance sheets, and difficulties in developing successful digital business models. In addition, values have been hurt by the growing skepticism around the viability of the mega-media strategies pursued during the past decade. With little evidence to date that Media conglomerates are capable of delivering the synergies and strong results promised.”
“The Media industry is beginning to question the importance of scale.”
“The search for inter-segment synergies has been mostly abandoned for now.”
“companies are refocusing attention on optimizing the core operations of individual business units with the objective of generating growth through both traditional and new distribution channels.”

3

“This will make it incumbent on Media companies to present the market with a clear vision for the future.”
“The downturn in profitability has already required Media companies to take aggressive steps to reduce costs, eliminate redundancies, and streamline operations.”
“Some argue that instead of synergies, consolidation has led mostly to conflicting operating strategies, while highlighting cultural differences among various Media businesses.”
“The average return on invested capital over the last five years of the four major Media companies was less than 4 percent annually, far below the 13 percent average return on capital for all large U.S. companies in the same period.”

4

“current trend toward deregulation of the culture industries in many countries”
“The market has shown that it will reward performance and innovation.”