Chillin' out till it needs to be funded
Irrespective of our interest in Investment Banking and our work in the area, even people unlike us in following investment banking and deals would support me when I say that there are a few industries that stand out from the successful growth path taken by US, India, China, LatAm and sometimes Russia, Korea and Singapore. All these global economies are linked by two of these and even my friends and erstwhile colleagues in Outsourcing and BPO would nod and revel in these facts that are true for Democrats, Republicans and likely the genesis of the Tea party for their visibility.
Well, these two industries/sectors that touch all of us, and get much more of our pocket today than they did last year or the year before that are aviation and the media and entertainment sectors.
The cost wars in Telecom and Utilities are legion, they are also characterized by a discontinuous impact of Technology of the Day as both sectors can have problems thrust by mapping current technologies and competitively represent a user consumable for of the right Technology for Power, Phones, or even the right Water supply. Turnaround and everyone wants a solution for these sectors that in many cases even guarantee profits, like the popular business and pricing models for Power. .
However government support is less likely for the seemingly ever growing aviation sector in terms of passenger miles being flown, new markets in the emerging world, high flying business projections from Airbus and Boeing, even new airlines in India and of course divestment.
But if we look at leaders in this sector in the US for instance, questions of monopolies survive in current restructuring deals and mergers in the sector with US Air and Continental Air struggling in recent memory much like GM and Ford and United Airways having come and gone into and out of Chapter 11 bankruptcy twice. It may be union dues in the US, but even otherwise in markets in China, India and Brazil Airlines are struggling for charging the right fares with flyers used to low cost airlines and 70% discounts on printed fares. In fact Travel and Transportation as a whole despite the required increased capacity fail to support profitable business models. Watch out this space for more actionable insights into global aviation as they may not be far from a government sponsored existence..
The other is the business of movies. While the glitz and glamour of the Oscars and our never ending desire to befriend celebrities remains true and people spend on more big ticket entertainment throughout the world as lifestyles improve, the fate of movies and production houses continues to remain in balance for decades on the run. Disney has bought and sold Pixar, Miramax and many more multiple times, while MGM and most support businesses in Hollywood face distress sales as movies move out of its old haunt without the benefit of profits to feed its captive population. We are a little short handed but if possible we would do in-depth pieces on the Disney deal as well.
Disney is negotiating over the weekend to sell Miramax this time even as its prior sales have not brought it the desired turnaround. High cost technologies have not seen the end they wanted but the money has been spent by loss making companies extending leases and untenable forms of financing finally losing the show. GE got out of NBC only to leave the legacy with already embattled Cable companies and Six Flags ran an unprofitable Entertainment park before shutting down and coming back in Chapter XI. Operational Management tricks and low cost asset models would have to take over to ensure appropriate commercial participation in the industry. Digitalization of assets has also been ignored worldwide because of the unremunerative cost of such ventures. Classically outside Asia, the movies business has also been only a competitor to Sport unable to bridge the formats. however, more later..