Television station WMSD is located in a Midwestern city of 1,750,000 people. The station is incorporated,...

 

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Television station WMSD is located in a Midwestern city of 1,750,000 people. The station is incorporated, with the majority of the stock owned by one family. The grandfather, age 68, who founded the station, already has begun to make gifts of the stock to other family members. His daughter, age 47, is currently the vice president and will manage the station after his father retires or dies. The station is affiliated with one of the major television networks. WMSD has 156 employees. Of these, 20 appear on the air, 7 are managers or officers, and 129 are clerical, production, or marketing employees. The payroll for a recent year amounted to $43,550,000. WMSD's assets include buildings and a transmission tower valued at $47.5 million on the books, but having a replacement value of $62 to $64 million. The station's equipment, including cameras, videotape machines, six cars, three trucks, a leased helicopter, and sophisticated electronic equipment and computers, has a book value of $52.6 million and a replacement cost of $73.5 million. In recent years, the station's eamings after taxes were as follows: Yearl, $58 million; Year 2, $65 million; Year 3, $40 million. The income came from selling commercials in the local market and from network revenue. In recent years, one sales representative was responsible for almost one-quarter of the local advertising revenue. WMSD is the second ranked station in the market and has become aggressive in the past three years in trying to increase its market share. The station management has faced an uphill battle in gaining ground on the number-one station, and there is concern that both stations have lost earnings to cable television. The station's cash flow is seasonal, with maximum receipts occurring during December. Any losses before special events, such as sporting championships, would have a major impact on profitability. Your assignment is to develop a risk management plan for WMSD. You are to consider all types of loss exposures and all the risk management alternatives discussed in this course. Give at least one example of how the risk management techniques of avoidance, assumption, loss prevention, loss reduction, and insurance may be used, explaining why each technique is appropriate. [Total: 40 marks] Television station WMSD is located in a Midwestern city of 1,750,000 people. The station is incorporated, with the majority of the stock owned by one family. The grandfather, age 68, who founded the station, already has begun to make gifts of the stock to other family members. His daughter, age 47, is currently the vice president and will manage the station after his father retires or dies. The station is affiliated with one of the major television networks. WMSD has 156 employees. Of these, 20 appear on the air, 7 are managers or officers, and 129 are clerical, production, or marketing employees. The payroll for a recent year amounted to $43,550,000. WMSD's assets include buildings and a transmission tower valued at $47.5 million on the books, but having a replacement value of $62 to $64 million. The station's equipment, including cameras, videotape machines, six cars, three trucks, a leased helicopter, and sophisticated electronic equipment and computers, has a book value of $52.6 million and a replacement cost of $73.5 million. In recent years, the station's eamings after taxes were as follows: Yearl, $58 million; Year 2, $65 million; Year 3, $40 million. The income came from selling commercials in the local market and from network revenue. In recent years, one sales representative was responsible for almost one-quarter of the local advertising revenue. WMSD is the second ranked station in the market and has become aggressive in the past three years in trying to increase its market share. The station management has faced an uphill battle in gaining ground on the number-one station, and there is concern that both stations have lost earnings to cable television. The station's cash flow is seasonal, with maximum receipts occurring during December. Any losses before special events, such as sporting championships, would have a major impact on profitability. Your assignment is to develop a risk management plan for WMSD. You are to consider all types of loss exposures and all the risk management alternatives discussed in this course. Give at least one example of how the risk management techniques of avoidance, assumption, loss prevention, loss reduction, and insurance may be used, explaining why each technique is appropriate. [Total: 40 marks]

Answer rating: 100% (QA)

Risk Management Plan Below is a list of the loss exposures found in the WMSD case This is unlikely t... View the full answer