This is what creative destruction looks like: disruption in the taxi, TV, and retail industries.

If you wish to become obsolete or gain hands-on experience with bankruptcy laws, the above strategy will work well. Cartoon is provided courtesy of Adobe Stock.

Companies and industries that can’t keep up with changes in technology or demographics or the internet are getting hit hard.

A few more hits to the old way of doing things:

  • collapsing price for taxi medallions
  • tricks to hide low TV audiences; gaming the ratings
  • more closures of Sears stores
  • Toys ‘R’ Us files for bankruptcy protection

The wide use of Uber and Lyft has affected the taxi industry. As one measure of the technological disruption, consider the price of a taxi medallion in New York. One cannot operate a taxi there without a medallion.

There is apparently a thriving business, or at least there used to be a thriving business, in buying a medallion and then renting it out to someone who wanted to drive a taxi.

The market for medallions has collapsed. Consider the following graph by Mark Perry, described in a tweet on 7/6/17.

Graph used with permission.

In other collapsing industries…

7/6/17 – Wall Street Journal – In TV Ratings Game, Networks Try to Disguise Bad News from Nielsen – The Nielsen rating system can be gamed by misspelling the name of a program.

The major networks pull that trick to increase their ratings. If there will be a particularly bad night or week, you can just misspell the show name and the poor ratings for that show won’t enter into the ranking for the real show.

NBC reported their evening show as “NBC Nitely News” 14 times this season, ABC reported “Wrld New Tonight” 7 times, and CBS listed “CBS Evening Nws” 12 times.

That is called ‘tilting’.

Other tricks include not labeling a rerun as such. Or loading network commercials at the front end of a show, since Nielsen only counts viewers through the last network break. One final clever stunt is to include viewers of a rerun as viewers of the original broadcast.

8/24/17 – Wall Street Journal – Sears to Close Another 28 Kmart Stores as Sales Slump Continues – Tally of closed stores currently stands at 100 gone so far in 2017, another 150 stores by the end of September, and an additional 28 now scheduled for closing.

The chain reported a 11.5% drop in sales at stores open over a year. Same-store sales decline 12.3% (presumably in the last year) which is a deterioration from a 7% drop one year ago.

The company has sold its Craftsman line of tools to Stanley Black & Decker (generating $900M), realized $469M from selling off real estate, and will now offer its Kenmore major appliances at Amazon.

One quoted analyst says Sears will have to generate an additional $1.2B in 2017 and $1.4B in 2018 to keep open what doors are still open.

The company gave a going concern warning in March 2018.

As a brief accounting observation, when a company is selling off assets (including some of the crown jewels) just to stay alive, then yeah, there is a going concern issue.

Another collapsing retailer:

9/18/17 – Wall Street Journal – Toys ‘R’ Us, Once a Category Killer, Is Forced Into Bankruptcy – The company filed for reorganization on Monday.  Vendors and suppliers were tightening terms in advance of the holiday season, which obviously means the store would have had a difficult, if not impossible job, filling up the shelves for the holiday rush.

Company says most of its stores will be open for the soon-arriving holiday season.

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