Old media hits the skids as new models roil market

Broadcast networks, newspapers, music labels struggle while Internet rises

December 22. 2007 12:28PMBy:  Joyce Hanson

Leave it to a group of Hollywood screenwriters to script a perfect scene showing the struggles that old media faces in the digital era. When the Writers Guild of America went on strike in November, it drummed up sympathy by posting countless videos of rallies and marches on YouTube—and received no compensation for the content.

From broadcast to print to music, New York's old media companies stumbled in the face of the chaos brought about by new media in 2007. The future of some of the city's most venerable companies and brands looks suddenly shaky.

Not enough network hits

Facing increased competition from cable and new forms of entertainment on the Internet, the broadcast networks have seen their hold on the American psyche slipping. This trend continued in 2007, when after a fairly promising upfront early in the year, the networks failed to produce the hits they needed to re-establish themselves. As of December, the networks' prime-time ratings in the key 18- to 49-year-old age category were all down: at NBC by 11%, at CBS by 10% and at ABC by 5%.

Newspapers also struggled mightily in 2007, in ways that hinted at underlying problems in the business. The New York Times canceled its Times Select online tool because not enough viewers were willing to pay for content.

The Times may be about to face a street fight from the new owner of The Wall Street Journal. In another sign of the chaos overtaking the print world, the Bancroft family sold its controlling interest in Dow Jones & Co. for $5.6 billion to media baron Rupert Murdoch, causing a hue and cry among observers who worry that the owner of Fox News and the New York Post will dumb down the Journal.

Some of the city's most well-respected magazine brands got into in trouble as the year wore on. The world's largest magazine company, Time Inc., saw ad pages decline at Time, Fortune, Money and Business 2.0 and finally killed the last title. Critics said Time Inc. had been too slow in developing a Web presence for its magazines.

Meanwhile, the future of Time's giant parent, Time Warner, remains unsettled. Time Warner said last month that Chief Operating Officer Jeffrey Bewkes will take over the company when Chief Executive Richard Parsons steps down Jan. 1. Mr. Bewkes is charged with the tough task of reinvigorating the company—and preparing Time Inc. for a possible sale.

Sad songs

The old media business suffering the most in the new media upheaval may be music labels. In 2007, companies were beset by plunging album sales and shrinking profit margins. While sales of single songs have been rising, sales of traditional albums had fallen a whopping 15% through Dec. 16, according to Nielsen SoundScan.

COMMENTS? cnyb@crain.com



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