Well Yeah!

Certainly glad to see others noticing this trend. That of course is the legacy papers and networks being put up against the wall. Can they survive in their current form? –

“If credit is frozen, advertisers can’t get the financing to fund day-to-day operations, which leads to cuts on discretionary spending for things like advertising,” says Anthony DiClemente, an analyst with Barclays Capital.

Network television is underperforming the GDP (gross domestic product) the most it has in nearly five decades, according to DiClemente.

Third-quarter results may hint at a television ad slowdown in September, he says. And by fourth-quarter, the downturn will be readily apparent — he projects broadcast television ad sales will slip 2.5 percent in 2008, year over year, and will drop a steep 8 percent in 2009.

The signs are already on the wall that the networks are entering Ugly Town. Last week CBS and Viacom cut full-year financial expectations, citing a lousy economy.

Always three ways to weather a deep recession — 1) Grow revenue at the expense of your competitor on market share. 2) Reduce expenses drastically. 3) Combination of the first two. Now (1) is tough in a down economy but there have been some that have done it. Like Apple. Everyone does (2) up to the limit of their structural constraints.

That ladies and gentlemen is the rub. For the network folks — CBS, ABC, NBC — they have a structural floor they cannot drop below. Class ‘A’ transmitters are damn expensive to buy compared to the most expensive Cisco router. Not only that but one must maintain a headcount with the appropriate certs, per FCC rules. And all that maintenance to boot for an off air audience that is shrinking. The cost-benefit ratios are becoming unsupportable.

Depending on the metro area cable/FIOS stands at between 40% to 65% of total viewership. Those connected homes are also the more affluent buyers. So it would make sense for the Big 3 to go direct. Ditch the towers and affiliates and run with TVoIP. A middling strategy would be TVoIP + feeds to affiliates. The understanding of course the affiliates are on their own on generating revenue, no cobroke.

It is a cheaper way to deliver content. Their own IT shop can be leveraged for delivery. The core problem? Its only a stop gap on the way to lights out. If you deliver a cruddy product it does not matter the delivery method. So that would have to be worked on.

More here.