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Monday, October 15, 2018

The Penn Central of retail: Sears and Kmart

Some readers are old enough to remember the sad formation of the Penn Central, a 1968 merger of three nearly-bankrupt railroads. PC itself, predictably, went bankrupt not long after — leading to jokes about what happens when you merge bankrupt companies… another bankrupt company. Today's bankruptcy of Sears and the near-certain doom of their Kmart subsidiary reminds me of PC. The 2004 merger didn't help either Sears or Kmart compete with the deadly combination of Walmart and Amazon.

The north Raleigh tornado of 1988 obliterated one of the two Kmarts near my house. (A panel from its corrugated steel roof would up in a neighbor's oak tree, wrapped around it in a U shape.) What was rebuilt on the site? Not a Kmart, but a Walmart — a sign of things to come. Walmart was a much better manager of its supply chain, and they were also faster to grasp the need of opening a good Internet store to compete with Amazon.

Less than 20 years ago, Kmart had more than 2,000 stores nationwide. Today there are only 10 Kmarts in the entire state of North Carolina, and three of those will close shortly. The only Kmart in the Triangle to remain is two miles from my house — the store that wasn't obliterated in 1988. I wonder, how long will it survive? My guess is, not into 2020.

Friday, October 5, 2018

Thoughts on Kavanaugh

This is derived from my response to another person's post on Facebook. I have no idea whether Brett Kavanaugh will be confirmed by the Senate, and I will not speculate on the outcome.

I hear four valid issues in the Kavanaugh matter:

  • Our society's obvious and shameful history of consistently tolerating sexual assault,
  • The fitness of Kavanaugh as an individual to be on the Supreme Court,
  • Fair treatment of anyone — not Kavanaugh specifically, but including him — accused to have committed a felony by another person where there is little or no directly substantiating evidence, and
  • Using a person's behavior at ages 15-20, whether prosecuted (and convicted) or not, as a reason to deny him or her something in adulthood.
All four points are serious and worthy of debate individually.

Meanwhile there are people unconditionally opposed to Kavanaugh, and there are people unconditionally supportive of Kavanaugh. From what I can tell, most of the time an unconditional position arises from what those particular people think of Roe v Wade (one way or the other). I think it's possible to separate the Roe v Wade discussion from the four points I've outlined above, but it's not possible for some folks to separate them.

I am reminded of National Lampoon's Animal House, released 40 years ago. There's a scene when one of the fraternity brothers says, "The issue here is not whether we broke a few rules, or took a few liberties with our female party guests. We did." Then the character winks as if it's ok. I am also reminded of things I saw happen at my almost-all-male university during undergrad school. Women have a right to be mad.

I did stupid and regrettable things in my younger years. Although no felonies were involved and certainly no sexual assault, I would not want any of those moments to be dredged up if, for example, I were to stand for public office. In that sense I have a general empathy with people in Kavanaugh's situation, but my general empathy has limits.

As to Kavanaugh's fitness to be a top-ranking jurist, it seems to me that more than sufficient questions have been raised about him aside from the allegations of assault. Furthermore his behavior under pressure was poor. Even Clarence Thomas did better. There are many other conservatives whom the Republicans could put on the Supreme Court. They should have nominated someone else to begin with. Perhaps that will yet happen. Another nominee won't address the concerns of some about Roe v Wade, but that's inevitable in the status quo.

Saturday, September 29, 2018

Who can take risks and who cannot

The owner of a North Carolina business that I patronize recently blogged:
My career on Wall Street has taught me one thing and that is the only bad risk is the one you don't take.
I tend to agree with him. Living an overly cautious life can lead to disappointment and failure to make the most of oneself and one's opportunities.

This applies to businesses, too. Around 1988 I had an interview at BellSouth for a high-level planning position in their rapidly emerging cellular business. Who wouldn't have wanted to work there at the time, right? Or so I thought.

On the top floor of the HQ building, with inch-thick carpet in the hallways and nice cotton towels in the washrooms, I asked my prospective boss about BellSouth's perspective on risk. He answered, "Around here we don't take risks. We do deals where the other guy takes all the risk."

I'll never forget those words. Immediately it became clear that I was not the person they wanted and that BellSouth was not the employer I wanted. I gracefully concluded the interview and flew home to Raleigh. I was not surprised that BellSouth underperformed over the long run and that most BellSouth executives couldn't find a home when AT&T took them over.

Returning to the quote above, I want to point out that in the context of Wall Street, it's easy to take risks with other people's money. Yes, you can kill your career if you make a big mistake, but you still have your own money in the bank.

My more broadly applicable observation: many people live on the edge of financial ruin. They cannot afford any loss, so they must avoid risk despite the possibility of better outcomes — and statistically, this almost assures them of poor outcomes.

The rich get richer because they can take risks, and the poor stay poor because they cannot.

Saturday, August 25, 2018

Bully for Battlebots

Now that I'm no longer living in an airplane on long-haul flights, I have lost track of broadcast television. It used to be that I'd see The Office, Million Dollar Listing, or some other show on the large screens in the cabin. I seldom paid attention to them and virtually never listened to their audio. But it was a way to stay in touch with popular culture.

These days the only thing I regularly watch on TV is Battlebots. It premiered in 2000, perhaps a little early for the technology and the audience. The resurrected show is in its third season after a hiatus 2002-2015. This year the format of the shows has changed to offer five battles in one hour…a great improvement over prior seasons when the show tended to drag.

Football and ice hockey, the most collision-oriented of the major team sports, are in long-run jeopardy because of CTE. Changes to protective equipment and changes to rules are not offsetting the increases in speed and power of today's better-trained, better-fed athletes. I doubt that football and ice hockey will disappear in the next 50 years —  way too much money is being made, both pro and college — but eventually these sports will go the way of boxing, which used to be more popular.

I wonder, what will become of Battlebots when its ratings increase 10-fold as people look for guilt-free ways to watch aggression?

Monday, August 20, 2018

Beach: each week a new hazard

I like going to the beach. In 2 hours 20 minutes, barring unusual traffic or a delay at the Intracoastal Waterway drawbridge, and assuming I arrive early enough to get a parking place, I can have my toes in the sand at Wrightsville Beach, NC. Fresh air, the sun (thank heaven for sunscreen), the sights and smells and sounds, the fresh seafood… it all adds up to a fun day.

But it's been a rough summer for beach lovers. At least eleven people have drowned off the NC beaches this summer, and Labor Day is still two weeks away. Last summer the total count was seventeen. There have been five shark attacks (none fatal) on the NC beaches so far this summer, about average. NC's Topsail Island reports a sting ray incident every day, on average, and that's just one island. It's been a worse-than-average year for stinging jellyfish here, too, and that includes rivers and sounds — not just the open ocean.

Fortunately the NC beaches don't get seaweed often, but it does happen. I remember seaweed more frequently at the Redneck Riviera (Gulf Shores, Ala. to Panama City, Fla.). Today there's a headline "Toxic Slime Is Ruining Florida’s Gulf Coast". Ugh.

Truth is, when I'm at the beach I don't go into the ocean much. For one thing, I don't like the crowds of summer and it's less expensive to go to the beach between Labor Day and Memorial Day. The water is not so warm then. But I've had my own bad experience in the ocean: retrieving my older son, who was around 10 at the time, from a rip current. It was not a strong current… a good thing, because I'm not a strong swimmer. If I had to list the five times in my life I've come closest to buying the farm, that's one of them. Both he and I could easily have become sorrowful statistics that day.

Gail and I talk occasionally about moving away from Raleigh after both of us have retired. The coast is one possible destination. Or we might keep the house here and rent an apartment for six months near Wilmington. The mountains are an alternative, and our discussions are inconclusive. Watching 50 or 100 sunrises from the beach would be a lot of fun. Running a boat up and down the Intracoastal and the Cape Fear River would be, too.

But out into the water? No, thanks.

Saturday, August 4, 2018

HD Radio: hardly a difference?

The radio business is in trouble. I don't mean radio as a fundamental technology; so much of what we use everyday — mobile phones, Bluetooth, WiFi — is radio, although digital. Instead I'm referring to traditional broadcast radio, AM and FM. CDs, then MP3 players, and finally streaming audio have diminished the audience for both AM and FM. As a result, some stations have left the air and others have merged into conglomerates like iHeartMedia (850 stations) and Cumulus Media (446 stations). Here in central North Carolina, Curtis Media owns 31 stations.

The industry has also responded with a technological push, too. You may remember the failure of AM Stereo in the 1980s and 1990s. A small number of stations, notably WLS 890 in Chicago, continue to use the C-QUAM technology. But the latest technology for both FM and AM is HD Radio.

Have you ever heard of it? Many people I've spoken with have not. It's denoted with this icon:

I'll focus on FM, where HD is having (or aspires to have) its primary impact. HD brings two things to FM: a digital signal that, in theory, has more clarity than traditional analog FM; and the ability to carry multiple channels on the same frequency. The former is touted by the industry as a great benefit to listeners, but it's the latter that the industry actually cares about.

Some FM stations choose to offer only one HD channel that invariably carries the same programming as the station's analog channel. Other stations choose to add a second, third, or even a fourth digital channel. These would be called HD2, HD3, etc in addition to the HD1 that's repeating the analog channel.

In the case of HD1, is the purported additional clarity of the digital signal meaningful? Not if you listen in an inherently noisy environment like an office or an automobile. Perhaps it is if you have excellent hearing (I don't anymore) and your environment is quiet, but even then it depends on engineering choices made by the station. Most broadcasters don't care about over-the-air fidelity. For decades they have altered audio to make it more understandable in noisy environments with a technology called compression. The stations won't tell you they use it, and you can't turn it off at your end. Some stations are more egregious users of compression than others. You would think that they avoid compression on their HD feeds, but I'm skeptical.

Multiple channels on the same frequency can be enjoyable, on the other hand. WUNC-FM, the dominant NPR station in this area, broadcasts indie rock and alternative rock on its HD2. Unlike a typical student-run station, WUNC-FM has a high-power transmitter on a tall tower. Therefore its HD2 has excellent coverage. See what's available in your area by visiting the promotional website for the technology, http://hdradio.com.

Will HD technology make a difference in the financials of FM stations? I doubt it, but I can't blame them for trying. HD has limitations. Every additional signal that an FM station adds will reduce the range of its existing signals. It takes several seconds for a receiver to recognize the presence of an HD signal; if you flip frequencies quickly, you'll never even notice that HD is available. It takes another several seconds to change from HD1 to HD2 on the same frequency, etc. And in some cases, HD1 will become unusable on the fringe of a station's coverage and the receiver will fall back to analog anyway.

If you want to experiment with HD, you may need to change your vehicle's audio settings. In my 2017 Hyundai, HD was disabled. I had to enable it in settings before the receiver would recognize any HD channel. I wonder how many people in similar situations don't realize that HD exists at all.

As for true digital broadcasting that drops the analog signal, Europe is moving forward. I don't see it happening in the U.S. anytime soon.

Saturday, June 23, 2018

Gecko hits the wall at Disney

In 1987's Wall Street the Gordon Gecko character made a memorable speech, penned by Oliver Stone and Stanley Weiser:
The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.
Apparently Mr Gecko's way to run a business has hit a wall at Lucasfilm, reeling (pardon the pun) from the fact that Solo: A Star Wars Story is a box office disappointment. So far it has generated only $345 million in revenues against a $275 million production budget. I suspect the film is barely breaking even, at best, after factoring in non-production expenses such as promotion. In comparison, the widely-critiqued Episode I earned over $1 billion and the equally critiqued Episode II earned $650 million — without taking inflation into account.

The commercial failure of Solo isn't the first warning. Episode VIII took in only two-thirds the box office that Episode VII did. Rogue One fell short of Episode VII, too.

Clearly the message is that people are tiring of Star Wars. This scares the devil out of Disney, who paid $4 billion for Lucasfilm in 2012. The assumption at Disney was that Star Wars could spawn all kinds of prequels, sequels, and spinoffs over decades to come — supporting two or even three releases each year. Ain't working out that way!

One could argue that the recent Star Wars releases are mediocre and deserve the box office they've gotten. But I'm certain Disney had believed mediocrity would be good enough. Disney might recover the situation by releasing a truly great Episode IX in December 2019. Problem is, no one can guarantee a blockbuster. Meanwhile Disney has gotten the message; their plans for films on Boba Fett and Obi-Wan Kenobi are said to be under reexamination. "The trouble with movies as a business is that it's an art, and the trouble with movies as art is that it's a business," laconically commented the late Charlton Heston.

Gecko was correct about greed in some narrow contexts. This isn't one of them.