Summary Blog: CBC Job Cutters?

http://www.nytimes.com/2009/03/26/business/media/26tele.html?_r=2&ref=business

Summary:
The articles is saying that CBC ( Canadian Broadcasting Company) the publicly owned operator of national television and radio networks, is going to cut about 800 jobs and try to sell assets to fight a growing financial shortfall caused by a advertising downturn, it said on Wednesday. This company which has 9850 employees and receives more than 1 billion dollars a year from the federal government, is expecting this shortfall to hit 171 million dollars. It blamed weak ad market, higher costs, a base salary financing shortfall and aging infrastructure. Its projections assumed the government would authorize 125 million dollar in asset sales. Other than the government funding, CBC usually generates $600 million a year in revenue from commercial activities. About 400 employees are being laid-off from the English-language services, and 335 are being laid-off from the French-language services and 70 are being cut in other areas of the company.

Connections:
The connection is the changed financial statement the company due to the significant decrease in wages expense. Since CBC is cutting jobs and selling assets to try and beat the recession, even though they are supported by the government, they would have more cash in the bank instead of having a lot of long-term assets. Also the manager has to choose which employees to lay off, so each one will be different and the accounting department will have to record everything. From calculating the last paycheck and paying it, but changing the info on employees will be a big task. I think that they should change their strategy in getting business from business ads, by changing the management or perhaps make better deals to bring in more business. But because of this turn-of events, the shareholders of the company are probably not very confident in the company, so selling some assets would then lower the shares costs and would lose interest in the company. Which would in turn weaken the company further, and then as people lose faith in the company it will continue to lose money, resulting in bankruptcy.

Reflections:
As we all know, the news has been filled with stories about companies big or small are cutting jobs and facing downfalls. This is not a different case, but the thing is, CBC is Canada's first broadcasting company. So from historical sentimental value its also has pride as being the first and one of the biggest broadcasting company in Canada. So due to these two facts it is possible that the Canadian government will support CBC and then they wouldn't have to worry about being shutdown or selling the company. Although they may not make a lot of money, but because the government is pratically running the company all they have to do is find some other business and they can keep it running without that much revenue.