It’s a game, a deceitful game. According to a July 7, 2017 Wall Street Journal article, television networks play a game to disguise possible poor ratings. Here’s an excerpt from the article:
“In a game largely sanctioned by TV-ratings firm Nielsen, television networks try to hide their shows’ poor performances on any given night by forgetting how to spell.
That explains the appearance of “NBC Nitely News,” which apparently aired on the Friday of Memorial Day weekend, when a lot of people were away from their TVs.”
It appears all networks do this and have no problem justifying it. But they’re not the only ones playing games. I see or hear about things like this all the time.
- People I know in the job market find a lot of misleading job descriptions. And to be fair, we know there are a lot of embellished resumes out there.
- In the small-business buy-sell world there are a lot of misleading games. Using middle-market or public company price-earnings ratios when valuing a small business (or when trying to get a listing) is one.* Trying to convince a buyer owner salary is the same as profit so it appears there are higher profits is another, and much more common.
I’m sure you see or hear of things like this all the time whether it’s pricing in a store or the advertised deal that seems “too good to be true.” You really have to be careful of what you’re being told.
* For those into numbers, according to the PeerComps database, which is small-business buy-sell deals financed by SBA loans, the average price-earnings ratio (the multiple of earnings) is about four, with a coefficient of variation of just over 25%. This means small-businesses typically sell for three to five times EBITDA (earnings before interest, taxes, depreciation, and amortization). Other databases show middle-market firms sell for 6.5-7.0 times EBITDA (I don’t have info on the variance). For reference, at this time the PE ratio for S&P 500 companies averages about 25 and for major bank stocks it’s about 15.
“The practice of deception is not particularly exacting, it is a facility most of can acquire.” John le Carre