Interesting article Dave and thank you.
Somehow I get the feeling that a 'perfect storm' has been brewing for a while.
Firstly the issues with TVAL although not directly connected to WNW are all part of the recipe. From my wider reading, other ingredients could have been the not as expected success of a recent movie release, what looks to be management changes at a senior level of the wider group and a subsequent different way of looking at things (maybe called politics !), COVID 19 and who knows what else.
You have to view whats happened not from an individual WNWs business perspective but from the wider business structure that makes up both Peter Jacksons corporate and personal investments.
Businesses like WETA, TVAL , WNW etc. must have huge fixed costs and burn up cash in a frighteningly quick manner especially if they are not earning enough revenue and making a profit.
Decisions and performance in one part of the group affect all parts of the group. I suspect some businesses within the group have been financially 'supporting' other businesses. But this can only continue for so long. Sooner or later something forces a 'rethink'. That something could be anything ranging from an economic shock to a people type shock ( ie. a founding principal of a business passing away). If the traditional 'cash cows' within the group stop performing and cash drys up up then the goal quickly becomes 'change the model'.
This will be the unrelenting focus of the senior group management...not what the managers of WNW itself or their employees think or are told/not told and not what customers think or are told/not told.
This focus shows up in the way they have dealt with employees and is no surprise at all to me as I have seen exactly this sort of behaviour many times in the corporate world. I am certainly not condoning it, I'm just saying its not unique at all. The focus of the senior managers will be on reducing short term expenses (typically labour which is the biggest non capital expense) whilst trying to generate an economic disposal of capital assets in the longer term.
WNW (and TVAL manufacturing as well remember) may have been seen as 'non core' and 'non performing' and a drain and therefore expendable. Maybe they were simply the easy parts to get rid of in the short term. They could be quickly and easily cut off from the main body without being life threatening to do so. I mean you survive without an arm or leg but you need your torso and head so to speak
The two wildcards for me going forward are firstly the disposal strategy. What is the current written down value of the assets and any liabilities for example around taxation. It wouldnt be the first time that assets are not disposed of because they are worth more sitting around to minimise tax liabilities for other parts of the group or similar.... in which case it may never be economic for the group to dispose of them. Is their book value such that it makes a sale probable or not probable? If its too high the group may retain the asset rather than bear a write off in the value at the time of a sale.
However the second and biggest wild card to me is Peter Jackson himself. Here is a man that pursued his dream when it came to not only WNW but also TVAL and other ventures. He demonstrated that he would pursue that dream repeatedly with some magnificent decisions which would never have been given the light of the day in a corporate world (not the least being the last multi engined large kit ventures) .......
and yet sometime in the recent past he has made a decision to effectively hand the decision making over to people that he knew did not share his dream and in fact quite the opposite...would treat it as a business with predictable outcomes.
So the key is why why why did he allow this ?..... was it simply the reality of knowing he had to cut one dream off to save another dream as per my discussion above, was it a betrayal of trust or friendship, was it something else of which we will never know.
My bet is that regardless of the reason/s that lead him to this point..... this is part of his dream, its part of his 'soul' so to speak...... for crying out loud look at the magnificent business 'abherration' that he built up over 10 spellbinding years and the risks that he was willing to bear not just with his money but the association of his name publically with those dreams.
I think that this is not a man that would so easily allow his dreams to be sold to someone else...he will hang on to the remnants as long as he possibly can ....and part of me says quite rightly so.
What a magnifcent abherration its been, it has defied so many conventional business wisdoms for so long, and we will all benefit for so much longer... what never should have been ..WAS... and I for one choose to send a simple thank you to PJ and his team.
Most importantly I sincerely hope that in the end he and the WNW team truly believes that it was all worth while...because I suspect for many of us it most certainly has been that and more.
Sorry for the long winded ramble Kind Regards Dino
