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"Postmodernism is a change-or-be-changed world. The word is out: Reinvent
yourself for the 21st century or die! Some would rather die than change."
Leonard Sweet, cultural historian.

11/27/2003 Entry: "Wall Street analyst sounds the local TV alarm"

Wall Street analyst sounds the local TV alarm
The old proverb says, "Wisdom is justified of her children." It means that you can't judge wisdom until you see what comes out of it. The same is true for prophecy, which is what people like James Marsh are paid to do. Marsh has an interesting job. He studies the broadcasting industry for Wall Street research firm, SG Cowen, and makes predictions about the future fiscal health of companies he watches. Marsh's latest prophecy is a dire warning for broadcast companies, as reported by Diane Mermigas in this week's TV Week.

Television broadcasters, who increasingly find themselves adrift in a multichannel media world, have only themselves to blame and may have only a few years to salvage or leverage their grass-roots franchises.

Because he expects a balance sheet threat to materialize by 2005, Mr. Marsh has downgraded four broadcast-related companies and lowered financial performance estimates for the seven media concerns he tracks.

Marsh's biggest concern is the threat of DVRs and their ability to sidestep commercials, something he views as crippling to affiliate groups, because they can't easily shift the commerical load to product placement. "The broadcasters who do not own the bulk of the programming they air [namely affiliate groups] will be most at risk during this transition period," he said, and the scariest thing of all is that these companies don't seem to share Marsh's concern. When he asked broadcast groups to respond with their thoughts and solutions, nothing came back. He calls it "rearranging the chairs on the deck of the Titanic." "No one seems to be taking it very seriously," he said, "but I think behind the scenes they have to be very nervous."

I would hope they're nervous. The 2004 Olympics and a Presidential election year will mask the balance sheet problem facing broadcast groups. These folks are normally short-sighted anyway, and it'll be easy to ignore what's really happening in the marketplace. Come the 1st quarter of 2005, however, and the situation will be acute. In my judgment, broadcast groups have one year to transform themselves into multimedia production and distribution systems or face crippling losses. Mr. Marsh, I salute you. We'll find out if your prophecy is wisdom or not, but I think the handwriting on the wall is screaming that you're spot on.


"The future is not something we enter. The future is something we create."
Leonard Sweet