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Big Breath...This, too, shall pass

The headlines do seem apocalyptic… mass layoffs, bankruptcies and all manor of economic chaos. Now more than ever, it would serve us to remember that headlines are not a full reflection of reality.

If they were, the world would be one tangled mess of car wrecks, house fires and Internet perverts. Empirical evidence suggests otherwise.

The paradigm is particularly true in financial reporting, which lives and breathes at three-month intervals. The current set of intervals is yielding some grim headlines… losses in the billions, jobs cut by the tens of thousands. Some of the money is certainly hard currency, and a portion of those jobs represent pink-slipped people. The rest accounts for perceived value and in some cases, unfilled, part time or contract positions.

Perceived value here refers to write-downs on intangible assets. Intangibles include value assigned to those eliminated jobs, as well as the dollar amount we would like to sell something for versus what it will bring.

For example, my pristine 1995 Mercury Grand Marquis is a crown jewel of automotive production. I wouldn't take a dime less than $10,000 for it. Blue Book values it at around $2,300. In this economy, it would probably bring two chickens, a converter-box coupon and some matchsticks.

A similar phenomenon is affecting media platforms. TV stations across the board are writing down the value of their licenses. They simply aren't worth what they were valued at just a year ago.

All of this seems disastrous prima fascia, but it's not. Write-downs are typically one-time events that put income figures in the red. Subsequent quarters are likely to come out much rosier.

Additionally, companies have long used the strategy of publicizing job cuts to get love on Wall Street by projecting cost containment. Many will quietly and methodically hire back up, though by that time, a contingent of the nouveau unemployed will have bootstrapped some sort of entrepreneurial venture.

The old Grass Valley Group provides an excellent example. Through its various incarnations, GVG alumni started Nvision, Ensemble Designs, Editware, Telestream, AJA Video, Sierra Video Systems, etc.

These businesses provide a more stable, diverse employment and production base in the community than one big concern. Across the country, we'll see unwieldy conglomerates will give way to individually created wealth, making the global economy less vulnerable to the fluctuations of a single entity.

One more reality to bear in mind in the current environment: companies are still making money. Revenues and income may be down, but that doesn't always equate red ink.

This is not the end of days. Just the beginning of new ones.

Deborah McAdams
Senior Editor
TV Technology