Financial Crisis Trickle-Down To Media, Consumers

[Commentary] The historic restructuring of debt and financial players on Wall Street will continue to have an arresting impact on Main Street, as well as on media-related companies dependent on advertiser and consumer spending in a troubled economy. Players of all sizes and sectors are hunkering down for more pounding. The impact varies, from severe disruption of ad-dependent core revenues for companies such as CBS to debt repayment issues for Tribune and Univision. A growing number of small to-mid-size broadcasters­including Young Broadcasting, Gray Television and ION Media Networks­are wrestling with liquidity pressures, according to Standard & Poor's. Still others will have trouble meeting loan covenants in a weak economy. Many new media upstarts have no stock-market exit strategy, or once-regular cash infusions. Media, entertainment, telecommunications and tech industries are also wrestling with their own vulnerable and broken business models. Recessionary and digital-driven revenue shift will clip earnings or cause some to default. On other levels, the purge of financial, transportation, auto and other major industry players will have a dramatic impact on all media advertising. Widespread consolidation means fewer companies to spend ad dollars and invest capital in technology software and hardware. It also can mean unmanageable scale. There will be less money all-around to fund the intelligent risks and creativity needed for long-term growth. Survival and stabilization are short-order goals, although opportunities will eventually emerge from the chaos. Once things settle down, everything will depend on integrating and executing new business models that need to be crafted now. The transition from static to interactive advertising is no small task. All of these adverse factors collectively will serve one good end. Companies along the broad media, entertainment and Internet spectrum will be forced to find ways to generate new income from new interactive trappings, such as social networks. They will be forced to create real value instead of relying on a continuous flood of unqualified capital to pave the way to prosperity.