Always expect the unexpected


Peter Savage cautions against complacency – particularly as none of us knows what will happen now the Royal Wedding is over and before the Olympic Games provide new business opportunities
We’ve been through some real highs and lows in the broadcast industry over the last few months. In April the Royal Wedding created the ultimate live broadcast spectacle, providing a huge economic boost for the British economy and bolstering the broadcast industry in the months preceding. Yet as the UK broadcast industry celebrated booming demand, on the other side of the world, a natural disaster, which led to unimaginable human tragedy, had economic ramifications that none of us could have predicted, least of all the broadcast manufacturing sector. Which goes to show, even when everything is going swimmingly, in business you need to plan for the unexpected – that curve ball right out of left-field.
The royal wedding was just a rehearsal
February and March were shaping up to be bonanza months in the broadcast industry. With international broadcasters winging their way to the UK to report on the royal nuptials and with shooting season just begun, media and broadcast hire companies had, it seems, never had it so good. Before we get to that curve-ball let’s take a moment to consider what the Royal Wedding meant for business in the British broadcast sector.
In a way, I suppose we can think of the wedding as a mini-rehearsal for the Olympic Games. I cannot remember the last time so many US broadcasters made the journey to set up a broadcast hub in the UK – with all of them taking feed from the home broadcaster the Mall looked like an international broadcast media centre.
In the run-up to the Royal Wedding, all hire companies reported increased business and this is just a taste of the level of international broadcast business that we can expect to see when the Olympic party comes to town next year.
Importantly, this rehearsal allowed several hire companies to forge key relationships with foreign broadcasters, in preparation for next year’s sports fest. With some of the mid-range to lower-end price camera formats, such as Sony’s XDCAM range, being readily accepted as true international standard HD.
As you can imagine, careful business and stock planning is critical in times of short, sharp demand. Whilst your business may be inundated with calls for cameras in April, this does not necessarily equate to lasting demand throughout the year. In these conditions, monitoring stock levels is crucial and cross-hire, or making kit available for cross-hire, could be crucial to keep your business liquid, whilst being well prepared for next summer.
And then came the curveball
Then, on the back of all this strong demand, came the curveball: the Japanese tsunami on 13th March. No-one could have forecast its effect but by April, NAB time, most of the world’s manufacturers were facing supply challenges. Although not all the manufacturers’ main factories were affected by the quake and subsequent shock waves, a combination of the shortened working week, due to a lack of power across Japan, and the loss of some smaller component parts manufacturers, caused a major interruption to the international supply chain. It seems that the whole of north-east Japan was a hive of small manufacturers making parts for all the major broadcast manufacturers – that would be assembled later at the main manufacturing plants. It was a particularly strangely curved ball.
After shocks through our industry
So what does this mean to you and me, the men and women in the broadcast industry? Clearly we must be patient as Japan gets back on its feet, but for dealers and systems integrators the coming months will be tough. Whilst demand for new product remains high, the supply of new cameras from Japanese factories will be limited this summer and it has even been forecast that people will run out of stock by the end of June. So with no new cameras to sell, what will this mean for dealer’s business forecasts over the next few months? And how quickly will the supply chain get moving again?
The jungle rule rules
In times such as these, it is cash-flow and low gearing that become king and then it is back to the usual jungle rule: the survival of the fittest.
Take a dealer’s balance sheet. This is normally made up of stock, debtors and creditors. Well, if those plates stop spinning and supply remains short in the channel, dealers will see just how strong their balance sheet is. If their historic stock levels have been too high, especially of the wrong product, dealers will effectively have no real product to sell, but the manufacturers and the banks will still need to be paid.
Ultimately, if the forecasts are right, survival will come to those who have enough cash in reserve to last a couple of months, even if they have little to sell. It’s a lesson for all of us about overdependence on one supply chain. It will be very interesting to see whether Japanese manufacturers consider opening plants in more countries in the months ahead, to help fulfill the back-log in demand. In the long term it will also be interesting to see if manufacturers see this as a one in a million curve ball or seek to spread the risk to their global supply chain by spreading the international distribution of manufacturing plants.
So, remember: when everything is going swimmingly, don’t forget to keep your eyes peeled for that curveball, because something always happens out in the left field. Good luck to the dealers over the coming months, many of which will hopefully be bolstered by their hire arms – especially those that went long on kit for the royal wedding.
If you would like advice on raising money for your business in tough times, or on other management and business issues, do email me on peter.savage@azule.co.uk and/or write to the TV bay editor. To read other articles in this series, visit our website: www.azule.co.uk.

Tags: iss053 | royal wedding | olympics | azule | finance | business | N/A
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