Tough Times In The Biz

The problem with the Internet is, it’s tough for conventional businesses to compete with something being given away for free! The entire cost/revenue structure of the Internet is crazy compared to traditional businesses.

tv-camera.jpgThere’s a big headline, in red, on Drudge tonight: “CBSNEWS IN TALKS TO CONTRACT OUT REPORTING TO CNN.” It’s actually just a link to a New York Times story which says CBS is thinking of outsourcing much of its news gathering.

I’m not sure what’s going on in my business all of a sudden. I suspect it’s not good.

Last week CBS started taking a hatchet to it’s owned and operated TV stations. For five decades, these O&O properties have been cash cows. No more.

Anchors and reporters, people whose services were fought over a few years ago, were dismissed without a blink. Some of these folks were making seven figure salaries. All were household names in their own communities.

For example, in Minneapolis, meteorologist Paul Douglas was let go. Paul had been in the market over twenty years. If he wasn’t making a half million a year, he had to be close.

He was gone before he could say goodbye.

“The simple truth: Like many other CBS employees, I was a target at a time when there are systemic, long-term challenges. No attempt was made to negotiate a lower salary; it was pretty cut and dry. It’s just business, dollars and cents — I get it.”

Writing in an online bulletin board for meteorologists, a former on-air met said:

NO TV weather job is safe. Longevity makes you even less secure (since you make so much more than anyone else in the building). Make sure you have a backup plan and a solid amount of savings (minimum of 6-months) to tide you over. Live frugally now and put away EVERY PENNY in case you are slashed in the next round of cuts which are inevitable.

I’m not sure I’m ready to go that far, but the business has changed. My competition isn’t just the local stations, or The Weather Channel (always a minor player in the general scheme of things), but, and every website with a forecast… which seems to be all of them.

The value of high profile talent, people who could draw an audience to a station, seems to have dropped rapidly. If these CBS firings have little or no negative impact on ratings, other managers will be emboldened to chop away too.

The Internet has changed many expectations. That’s fine, and as it should be.

The Internet has freed information from a schedule. Virtually everything is available on demand. And, at the moment, the Internet reports the news without reporters, shows video without production staffs, and sells products without stores. Companies that pay people say, “why?”

If at some point the Internet drives newspapers and TV stations out of business, where exactly will local news come from?

The Internet resembles the oxpecker, an African bird that lives on rhinoceroses.

“Although the birds also eat blood from sores on the rhino’s skin and thus obstruct healing, they are still tolerated.” – African Wildlife Federation.

The problem with the Internet is, it’s tough for conventional businesses to compete with something being given away for free! The entire cost/revenue structure of the Internet is crazy compared to traditional businesses.

Last year, Google had $16 billion revenue with 18,000 employees. That’s around $900,000 revenue per employee. Their ‘real’ operating expenses were only $2.7 billion, with another $2.1 billion thrown in for research and development. Their pre-tax net was close to $6 billion.

Is Google or Craigslist responsible for what’s going on to newspapers and broadcasting? Maybe. Maybe it’s the appearance of hundreds of channels, each with a tiny audience… but it’s tiny times hundreds!

Maybe it’s the Wal*Mart’ing of America; the disappearance of hundreds of stores in favor of one… and the disappearance of hundreds of local advertisers as well.

It’s not one thing. It’s a variety of things, but they’re reaching critical mass.

At the moment, you can buy two shares of Journal Register (publisher of the New Haven Register and other papers) stock for about the same price as a copy of its newspapers!

Journal Register just announced they’re exploring their ‘options’. I don’t know a lot about finance, but is there anything left to sell?

Sam Zell, who heavily leveraged his recent purchase of the gigantic Tribune Corporation, is now rumored to be selling some of their papers. That’s something he originally said he wasn’t going to do. He needs the cash to pay the debt.

The funny thing is, newspapers, radio and TV stations still make a lot of money, as long as you don’t factor in the financing used to buy them. Many were purchased at what now looks like inflated prices. The assumption was their value (and revenues) would rise. It’s similar to what’s gone on in the housing market.

Tonight on IM, a friend in the business said

Sorry to say this, because this is your income, but, Local TV is DOA.

In a way, I’m glad you are at this stage of this career and this isn’t happening in 1980.

You have many things you can do

Again, I think that’s a little heavy on the melodrama, but times are definitely tough.

I am very lucky to be under contract right now.

What Have I Forgotten?

We’re about 12 hours from airplane departure for Las Vegas. What have I forgotten?

Most of my packing is done by Helaine. It’s much better that way since I have the same sense of fashion I had in 1967 – and that’s not a good thing. I do have some responsibilities, like my toiletries and electronics.

The toiletries are easy, because I’m taking what I use on a daily basis and just throwing it in a little bag. Everything is congregated around the sink. If anything looks like there’s not enough for a week, I just take a new one and leave the old one for my return. Brainless. I’m perfect for this.

Electronics is different, because I’m taking things I might not use everyday – things which are spread out across my home office. Do I have the right cables for the camera? The right peripherals for the computer? Forget the 10/100 PCMCIA card and forget about the Internet. Or, is it 802.11b? I took one of those adapters too… and a dial-up modem. Who can tell? The Dell laptop has a charger with the longest power cable I’ve ever seen on an electronic device. You can plug it in in a different time zone if you want.

I have 12 AA NiMH batteries and three chargers. The digital camera sucks juice like crazy. There’s also a small can of compressed air. Lately, I have noticed some dust inside the camera lens. The air gets rid of it. Is compressed air restricted by TSA in this post-9/11 era?

I’ve finished up the last of my school work, taking three weeks of classes in two courses over the last few days. As the week goes by I’ll be able to check the online bulletin board and watch my grades pop up. It is very unlike me to be early for anything – certainly not school!

My last assignment comes at 12:01 AM. I will be on Southwest’s site getting our boarding passes. With no assigned seats, getting a Southwest “A” pass is crucial.

Then it’s to bed, never letting one thought out of my mind. What have I forgotten?

Midterms – The Results Are In

I got the results to my midterm exams back today. As suspected, I did well in Applied Climatology with a 98%. Radar Meteorology, the one I expected trouble in, gave me trouble with an 88%. I need to maintain a 90% average to stay an “A” student.

This was by far the most brutal exam I have taken at MSU. Below is the class breakdown. The median grade was below a 70%. A significant portion of the class flunked or did poorly.

Some employers demand a certain grade result before they’ll reimburse, so there are going to be some upset students this weekend.

Meanwhile, the online bulletin board has been silent – so far.