Summit Notebook

Exclusive outtakes from industry leaders

Diller to profitable companies: Lay off the layoffs

December 4, 2008

IAC Chief Executive Barry Diller took several groups to task at the Reuters Media Summit, but he reserved special disgust for CEOs at profitable companies who add to the country’s rising unemployment rate.

Also targeted by the former Hollywood executive were “incredibly, shockingly stupid” Big 3 auto executives, the Internet’s strange and growing dictionary, and Hollywood’s lack of creativity.

Diller said companies had a higher obligation, especially in tough times like these:

“The idea of a company that’s earning money, not losing money, that’s not, let’s say ‘industrially endangered,’ to have just cutbacks so they can earn another $12 million or $20 million or $40 million in a year where no one’s counting is really a horrible act when you think about it on every level. First of all, it’s certainly not necessary. It’s doing it at the worst time. It’s throwing people out to a larger, what is inevitably a larger unemployment heap for frankly no good reason.”

A few seconds later, he added:

“It’s not that you don’t want to earn as much money as you can — it is your obligation, of course — but companies have obligations beyond that and they certainly have obligations beyond that at certain times, in the times in which they operate. And they also certainly ought to know that meeting and beating expectations is probably yesterday’s game and it will be increasingly so, which would be by the way very healthy for companies. Running a company that meets and beats expectations, and that runs their company accordingly, are companies that I would question why anyone would invest in.”

Diller was equally confounded by the top three U.S. auto executives, who recently were criticized for separately flying corporate jets to Washington before hearings to request a $25 billion taxpayer bailout.

“It’s incredibly, shockingly stupid if you’re going, when you think about it. On that count alone I wouldn’t give them any money. And not because of any reason other than why would I give money to someone so dumb to go to Washington to ask for money and fly in a Gulfstream. You’d say, ‘You’re not qualified. Unless you leave, I’m not giving you money.’”

Other topics:

* When discussing social networking: “Think of the bimbo words this Internet has created: portal, social network; I could riff on …. networking, horrible word too.”

* Hollywood: “Margins used to be very good in the movie business. They’re now, what, 4, 5 percent in a decent year, so where’s the joy in that? Is there really a joy in ‘Superman 17′ or “Iron Man 2′?”

* Movie studio executives: “‘Mogul’ is yesterday. It just doesn’t apply. You use the word ‘mogul’ and what you do is conjure up the fantasy, the memory of when there were actual movie moguls who made their decisions, believed in what they did, were outsized personalities. There’s no outsized personalities in the movie business anymore.”

* Indiscriminate spending: “There is a reluctance, even with people who have vast resources. Right now, it just isn’t the order; it isn’t the day. You’re not going to see a birthday party for three million bucks. I don’t care how many billions you have or paying Mick Jagger $3 million to come and sing for your birthday. I notice this with my friend. I just notice this as a condition of this period.”

To hear the always entertaining Diller riff, go ahead and click on the links…

(Photo: Reuters)

Comments

Who the hell is this guy?

Posted by $ | Report as abusive
 

Bob A the Republosaurus!
Companies do have a responsibility to their shareholders/owners. True. They ALSO have responsibilities to their employees, customers, vendors, and the society they live in, because their actions affect them all. One does NOT take huge precedence over all the others. Employees take no risks? What planet is he from? Diller is a decent human being.

BTW, it’s “oblivion” not “oblivian” – and Obama is simply stating the obvious, that those with more money than they know what to do with can contribute a bit more to support the social structures that enabled their wealth accumulation. It’s “nitwits” not “nit witts,” “affect the middle class” not “effect.”

Posted by John B. | Report as abusive
 

I was pleased to see that he isn’t in favor of layoffs so that a company can make 40 mil in profit rather than 20. That is what he is saying. If your company is turning a profit (but not as much as last year) then you have no business laying people off. Layoffs for the sake of maintaining an already high profit margin is ridiculous. It’s short term, quarterly book cooking. These companies will have to rehire in the next quarter anyways, as they will be understaffed. Finally a CEO with a head on his shoulders. Thanks Barry.

Posted by Gene | Report as abusive
 

He is right. It is a socialist mind set, but, those layoffs contribute to the bad economy. It’s short term thinking. If companies making money held strong with less profits then the economy would improve faster. Pay attention, read about Honda’s approach to the last auto crisis. They didn’t lay off people.

 

In theory, companies have no obligation to their employees and visa versa, except to pay for work and to work for pay. However, since employees are not machines, companies must craft policies to maximize work received from employees and to allow employees to maximize pay received from companies. This is an implied symbiotic relationship. Without this relationship, low employee morale will threaten the viability of the company.

Posted by Jimmy | Report as abusive
 

These comments are horrible. Since when is a company obligated to employ a certain amount of people? A company has obligations to its shareholders, NOT to employees. No matter the size of the business or corporation, profit is the goal. Employees have to EARN the right to have a job by producing what is expected of them. It concerns me that so many people commenting here believe that they deserve jobs just because a company makes a certain amount of profit. Welcome to the Obamanation.

Posted by Dason | Report as abusive
 

Diller and all of you people are NUTS!
The reason the companies are making money in the first place is that they are doing Responsible things such as cutting costs AND cutting jobs in this difficult market so as to maintain profitability. Do you have any idea what those numbers you “throw around” are in terms of percentages of revenue? That is what is important. If 40m is 1% of revenue, cutting costs and jobs IS indeed the responsible thing to do. That company is on the edge of Losing money. Yet you and this genius Diller seem to think that you are smarter than they are; and want to “tell” them what they should do. That is socialism, communism, central planning. I know you don’t like those terms; but they do apply.

Posted by Richard Lund | Report as abusive
 

Companies also lay-off in anticipation of bad times and to fortify their cash reserves.

Posted by task | Report as abusive
 

John B. how nice of you to edit the other guy’s grammar, that really lends credence to your argument.

Employees have responsibilities. Company Owners have responsibilities. Everybody has responsibilities.

But don’t twist these rightful responsibilities into some idea that those who work harder are beholden to those who do not. You are doing this when you talk about Obama’s wealth redistribution plans. You can throw all the bleeding-heart arguments out there that you want: but when it really comes down to it, you’ll always be able to find someone who’s working as hard as he can and accumulating wealth, and another person who could be working harder and is complaining about the other guy’s success. Herein lies the fault in Obama’s wealth redistribution plans. Sure there are many exceptions, but in the above, all-too-common scenario, what right does the lower income earner have to demand direct or indirect monies from the higher income earner? None.

Posted by Henry Rearden | Report as abusive
 

Companies should acknowledge an ethical duty of benevolence when dealing with employees. An excellent point was brought up and I think brought up well. A company that is profitable should be benevolent! It’s the lack of benevolence and the abundance of greed that helped get us into this mess to begin with!

 

Who does this guy think he is, James Taggart?

Posted by Matt | Report as abusive
 

RE: Henry Rearden;

Henry your logic is shockingly stupid! He is talking about ‘responsibility’ and not an ethic driven by money accumulation to create ‘shareholder wealth’. We gave the keys of our economy to wall street, and they ran the bus right off the cliff. What do you expect from Wall Street bankers? I am actually not surprised that you forgot about responsibility, most people have.

>But don’t twist these rightful responsibilities into some idea that those who work harder are beholden to those who do not.

Ok, we weren’t talking about that but it is obviously on your mind. Not sure how you define work, to me, working hard is working fast-food, mindless jobs where all you do is the same thing over and over again. That is working hard. To assume that the world works in a way where the ‘hardest’ workers got paid the most and the ‘laziest’ the least, well, you have better drugs then me my friend.

It’s not about who works the hardest at all. It is about who has the means. If you have the means, then you have a responsibility to this country to help it in a time of need. To help-out your fellow man. But I’m sure that thought doesn’t cross your mind too often.

>You are doing this when you talk about Obama’s wealth redistribution plans.

Umm, no, you have absolutely no idea what you are talking about. Obama is talking about taxing the rich more, it has nothing to do with ‘hard work’. It has to
do with the fact that we have given tax-cuts to the wealthy. Now that the nation is in a financial crisis. I think it is prudent to start having the wealthy pay more. The bottom line is that hyper-capitalistic behavior managed to do something called ‘destroy production capacity’. Ever hear the saying “don’t kill the goose that lays the golden eggs?” Here ‘the goose’ represents a healthy economy.

Think I’m overstating? The bankers developed a ‘financial instrument’ called mortgage-backed-securities. I believe Frank Fabozzi was instrumental in their development. Anyway, they decided to get as greedy as they could until they had no idea how much their ‘financial instruments’ were worth. Hmmm, bankers
who have a nice big vault of ‘something’ could be gold, could be dirt. The party ended when AIG found out that that behind door number three was a pile of dirt.

Posted by Will | Report as abusive
 

The lower income earner is not aware that the really higher income earner pays a smaller percent in taxes. Did not Warren Buffet say his employees paid more taxes then he did, and they were not aware of that. Nor was I until I heard that story. So why should it not be equal?

Posted by Suzanne Chimovitz | Report as abusive
 

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