Tuesday, November 3, 2009

Another Multimillion Dollar Company Makes a Profit in the Recession

It's common to hear about the greed of companies leading to them make profit these days, despite the recession. It's also common to hear about companies having to cut jobs and cut back on expenses just to minimize their losses. But, there is at least one company that by scaling down has actually acheived its short-term goal of turning the recession into a positive, all while ethically following the rules.

According to a New York Times article, Viacom (the company that owns MTV and Paramount Pictures) reported a rise in profits for the third quarter, but it was "a performance acheived through cutting costs and shredding workers."

Though Viacom's two main sources of revenue declined (advertising and feature films), its net earnings for the quarter were still over $60 million more than the third quarter of 2008. The main drivers were the success of the video game "The Beatles: Rock Band", and movies "Transformers: Revenge of the Fallen", "G.I. Joe: The Rise of the Cobra" and "Paranormal Activity". The increased profitability is attributed to the costs cut and the decreased amount of movie releases for the year.

I think Viacom was one of the few companies that did it right. America was living beyond its means after the surplus in 2000 turned into a multi-trillion dollar deficit by 2008. It was overdue for the country to scale down everything and Viacom was the perfect example of how companies should deal with the recession; they lost revenue but increased profitability, cut jobs but rose in the stock market, and made fewer movies but the only thing that did was filter out the lower quality movies, which led to more money made per release.

3 comments:

  1. I think that people are always going to want things new and exciting. Video games and movies count just as much as anything. If people would stop listening to the news and would stop being scared and go out and spend their money responsibly, then the economy could possibly be in better shape. Viacom did what it had to do in order for the company to survive and you can't blame them for cutting jobs.

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  2. I'm glad someone can profit right now. With their movie Paranormal Activity killing it at the box office, Im sure they will be up next quarter too.

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  3. I think that it is impressive that this company came out on top. Any profit in this day and age is good, and the resources such as making top quality products, which are without a doubt going to be in demand is the perfect solution to the economy. Hopefully other companies can follow the example they have set, and increase profits, and create more jobs.

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