http://www.nytimes.com/2009/03/26/business/media/26tele.html?_r=1&ref=business
Summary
This article talks about the CBC is cutting jobs. CBC, the publicly owned operator of national television and radio networks, will cut about 800 jobs and try to sell assets to fight a growing financial shortfall caused by an advertising downturn, it said on Wednesday.It said its projections assumed the government would authorize 125 million Canadian dollars in asset sales.Aside from government funding, the CBC normally generates about 600 million Canadian dollars a year in revenue from commercial activities.About 400 employees are being laid off from the CBC’s English-language service, 335 will depart the French-language arm and 70 are being cut in other areas of the company.
Connection
The connection between this article and accounting is the financial statement. Since CBC is cutting jobs and trying to sell assets to fight a growing financial shortfall, its salaries expense would be lower and will have more cash on hand instead of long term assets. Although CBC maybe get support from the government like other banks do, but their status is alert. The owner would possibly decide to change the management for advertising since the main reason causing the downfall is the poor advertising.On the other hand, shareholders would not be happy and may be selling their interests in the company that seem to be heading for trouble. Instead of selling the shares, the owner may consider selling the company and will make the financial statement looks as good as possible.
Reflection
Recently, we can see many news about xxx company cutting of jobs or cutting work hours and etc.. As we all know, CBC is the 1st broadcasting company in Canada. Just like the Berkshire company, which has a long history, but they were facing their annual worst last fiscal period due to the wrong decision making by Buffett. Although Berkshire didn't need to sell assets or cut off jobs to reduce company expenses, the company was not in a good status. I think the government of Canada will support CBC just like the US government supports banks in the states.
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2 comments:
Hi, William
I am Wayne. I agree your point. Under the growing financial shortfall, it is difficult to keep operating a business. But owners and the government will not give up. This shortfall is too powerful; every single person is affected by it. Many companies cut jobs to reduce the liabilities. So how about those unemployed people? To them, no jobs mean don’t have money to do anything. Then the only thing waiting for them is death. By the way, to a company in the shortfall, holding cash is a better choice than holding long terms assets.
Hi, William
This is Hector. I think what the CBC is doing now is the right thing to do during the recession. Companies will do everything they can to save money and make new market strategies to keep the income looks as good as before. To save money, what most of the companies can think about is to cut jobs. Mainly low and mid-level employees. Personally I don't agree with this choice. Just look at those high level employees. What they do is sitting in their offices and doing nothing most of the time but getting over million of dollars every year. Now we see the problem, what a single low level employee can make one year is about 15000 to 20000 dollars. So what I will do is to cut the high-level staffs' salaries instead of cutting a hugh amount of jobs.
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