Originally published: September 15, 2009
Last updated: September 15, 2009 - 9:42pm
[Commentary] Some suggest that much of the media business will be owned by the banks or will otherwise go through restructuring and a dramatic de-leveraging. Rich suggests that the necessary cleansing process has set the industry up for a rebound at the expense of Internet companies. with an appropriate capital structure, conventional media can take advantage of its brand, content and reach to dramatically expand into digital. Many of the existing Web 2.0 business models are even weaker, even in the long term, than those of traditional media. Online advertising prices are extremely low, particularly for non-name brand Internet properties. Most Internet companies are alive only because they are propped up by cheap venture capital financing that is in the process of drying up. On a straight up basis, a traditional media company with a strong brand and digital product should be able to out-compete all but the best Internet-only companies. In the past, traditional media companies were weak online out of fear of cannibalizing the offline revenue and cash flow that sustained their valuations and debt loads. They will soon have a great deal less to lose, likely under fresh ownership and management. It's time for traditional media to rise up and exact its revenge.
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