Real options theory, flexibility and the media industry

Abstract

This conceptual paper is based on two propositions: 1.) An efficient flexibility management is a critical success factor for media companies. 2.) The concept of real options theory (ROT) aims at improving a company's flexibility management. As a consequence, it is analysed how ROT can contribute to the flexibility management in media companies. In this context, two research issues are investigated. First, it is shown that real options as substantiations of flexibility are of great importance for media companies: In doing so, it is outlined that options which focus on a company's fixed costs management and options which aim at improving a company's sales situation are of high relevance for all segments in the media industry. Contrarily, options which focus on a company's variable costs are only relevant for media companies engaged in the print segment. Second, it is illustrated how ROT can contribute to the reactive and proactive management of flexibility in media companies.