A few weeks ago I blogged about how I thought land line phones and cable TV would be among the first items to go as people cut budgets. In contrast Cell phones and internet would be among the last (can you imagine trying to find a job without an internet connection?)
Well I forgot to mention that newspapers would be the other obvious target… why spend to get a newspaper when you can get the content online for less or for free?
So I was probably rash in saying that traditional telephone companies (are there any left?) and cable companies would be among the first to feel the pinch. It is going to be newspaper companies. The end is going to come fast and furious. It won’t be pretty.
For my American friends there is already talk about how much trouble the New York Times is in. Indeed, as one industry observer points out, the NYT may not survive past MAY – although by drawing down on its credit and selling assets (like the Boston Red Sox’s) it can survive until 2010.
Here in Canada the situation is bleaker. CanWest, which owns the National Post as well as newspapers in most of the country’s major markets (such as the Vancouver Sun, here in my home town), has reported Q1 losses and its stock continues to free fall. Having lost 92% of its value in the last year it may no longer be able to meet its debt servicing requirements. It turns out that buying more newspapers is not the solution for newspaper companies. A bigger broken business model doesn’t, at some point, transform into a working business model.
The old modes of production are in trouble. Today it’s print, but TV/video better not assume the same pressures won’t be confronting them in the near future.