Diversification Strategy And Firm Performance Of Traditional Media Companies

In the past 40 years of reform and opening up,Chinese traditional media has experienced a tortuous development process,from the start to the prosperity and development,and then the transformation.In recent years,the rapid development of Internet technology has continuously brought pressure and challenges to the survival of traditional media companies.Since 2012,the income of newspapers and magazines in China has been in a negative growth state,and the circulation and sales volume of newspapers have also shrunk dramatically.In this context,traditional media companies have tried to diversify their business to reduce the risk of traditional business decline.By 2017,many traditional media companies have diversified business revenues that exceed their main business.In the context of the main business decline,can the business diversification strategy adopted by traditional media companies improve the performance of enterprises?This issue is worth studying.This article takes Zhejiang Daily Digital Culture as an example to analyze in detail the development process of the company from professional management to business diversification,and the impact of diversified behavior on corporate performance,in order to provide a certain reference for the transformation of traditional media enterprises.This paper sorts out the operation of the traditional media industry,related industrial policies,and the situation of listed companies in the industry.This paper finds that traditional media companies generally adopt a business diversification strategy.This paper also uses the number of business units and the Herfindahl index to measure the diversification of the business of traditional media listed companies.Zhejiang Daily Digital Culture is the first company to diversify its business.The process of its professional operation to business diversification is divided into threestages.This paper analyzes in detail the characteristics of each stage and the impact on the company's financial performance and market performance.The analysis conclusion of this paper is that when the original main business operation of the enterprise has great risks,the implementation of the non-related business diversification strategy can make the income and profit of the enterprise increase compared with the professional operation period,and also enhance the company's market value,but it does not bring significant improvement to the financial performance of the enterprise;when the enterprise diversifies the relevant business through the adjustment of the business,the financial performance and market performance of the enterprise are improved,that is,the diversification of the relevant business of the enterprise can be bring a premium effect to the company.For traditional media companies with a decline in their main business,business diversification is indeed a good choice for corporate transformation,but diversification cannot be blind.Traditional media companies are involved in a number of unrelated industries,which can reduce business risks in the short term,but may have a negative impact on business performance.In the process of implementing business diversification,enterprise implementation needs to make timely strategic adjustments according to the business operation of the enterprise,and focus on the development of related businesses.