Management Teams and Lenders Important for New and Legacy Media Businesses
Management teams and lenders are important components of new and legacy media businesses as they seek to create business models, said panelists at a Minority Media and Telecommunications Council conference. The Internet’s business opportunities have raised the question of “how to create a new business plan in a world in which [traditional media’s] function can now be bypassed,” said Anna-Maria Kovacs, a senior policy scholar at Georgetown University. The online world’s disintermediation and ability to bypass traditional media has “substantially changed the business plans and the risk profiles of the legacy world,” she said.
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"The most important thing is team,” said Hank Torbert, managing partner at investment firm Avondale Ventures. “Everyone has to uniquely understand how to add value to the opportunity.” Managing Director David Meier of Gladstone Cos. said businesses “need to have a diverse management team that has functional expertise across different categories.” Torbert said the team should include a financially focused CEO.
Meier and Torbert recommended financial advisers. “Sometimes you need help, you need expertise,” Meier said. Businesses, whether legacy or new media, should consider the perspective of their audience when seeking funding: A senior lender examines the stability and history of a business while a mezzanine lender looks for growth, Meier said. Businesses should consider financing from local banks, he said.
"The key issue for anyone who is looking for funding is to figure out which of these routes [legacy or new media] do you want to take, and figure out what your business model is,” Kovacs said. Meier said disintermediation resulting from the Internet has created a “challenge for lenders like myself because we focus on revenue and looking to established businesses.” He said the history of a business -- its demonstrated ability to generate revenue and stable cash flow -- is more important than whether it uses new or traditional media.
Business plans should also consider a variety of media options, Torbert said. “Don’t fall in love with projects that are ‘me too.'” Businesses shouldn’t pursue social media, digital layout, and mobile app aggregation simply because everyone else is doing it, he said. “There are many different types of opportunities in media now and telecom, and I don’t want people to … get caught in the sexy part of it.” “There are other businesses that are out there that make a lot of sense,” he said, mentioning telecom services companies.