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Case Details

Case Code: BSTR529
Case Length: 7 Pages 
Period: 2005-2017 
Pub Date: 2018
Teaching Note:Available
Price:Rs.200
Organization :The Newseum
Industry :Museums, Non-Profit
Countries : The US
Themes: 
Case Studies  
Business Strategy
Marketing
Finance
Human Resource Management
IT and Systems
Operations
Economics
Leadership & Entrepreneurship

The Newseum-Will It Survive the Sustainability Crisis?

 

ABSTRACT

 
This case is about Newseum– a unique and interactive news-based museum that promoted free expression through exhibition galleries. With a $307 million debt on its building, $61 million annual operating budget, and about eight successive years of deficit in the books, there was a question mark hanging over the sustainability of the crusader of the First Amendment. The latest available financial statements, which were as of 2015 showed revenue of $59.3 million and expenses of $61.9 million, leaving the Newseum with a deficit of $ 2.6 million. Most of the financial requirements of the Newseum were funded by a single donor – its promoter firm, the Freedom Forum. As of 2017, Freedom Forum had infused more than $500 million into Newseum. By 2017, the Newseum had gone through four rounds of lay-offs, which painted a bleak picture of its very survival. The one-of-its-kind of museum that had an annual reach to over 8 million students and millions of other groups globally, found a dearth of generous donors who could help it avert the crisis. The Freedom Forum also found it challenging to supply any further funds to the Newseum, pushing the museum slowly toward a possible closure.

While there were several reasons behind the debacle, the Newseum’s business model was widely regarded as the primary reason for its crash. At the end of August 2017, the Freedom Forum initiated a strategic review program to take stock of the situation and arrive at an appropriate decision that would be in the best interests of the sinking museum.
 
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Issues

The case is structured to achieve the following teaching objectives:
  • Appraise the business model of the Newseum
  • Understand the nature of the Newseum’s business, its stakeholders, its revenue sources, and the nature of its expenses
  • Evaluate the factors that pushed the Newseum into financial distress
  • Examine whether there is a survival/ turnaround strategy that could save the Newseum
Contents
INTRODUCTION
ORIGINS
FINANCIAL DISTRESS
SUSTAINABILITY ISSUES
ENTROPY
THE ROAD AHEAD
EXHIBITS

Keywords

Turnaround ; Bankruptcy; Turnaround Strategy; Strategy; Crisis; Newseum; Smithsonian ; Strategic Review Committee; CEO Turnover; Lehman Brothers; Freedom Forum; First Amendment; Business Model; Sustainable model; Change management;

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