The softening U.S. economy is to blame for weaker ad sales, with S&P Ratings forecasting a 1 percent rise for 2008 and a scant 0.9-percent increase for 2009. Ad sales rose 0.4 percent in 2007.

In the talk, which is transcribed below, Hurley compares the current state of online video to the nascent years of television. In 1941, he says, “CBS has just launched its new television network amidst cries that it means the death of radio.” Advertisers were hard to come by. Content owners were afraid of alienating their existing audiences. etc.

• First, the meltdown has deepened, widened and -- most hurtfully - lengthened the consumer spending downturn. Consumer spending of course is a prime driver of ad spending. Fewer dollars to spend -- less money chases those dollars. Classified advertising took the brunt of the first half, 2008 turndown, with real estate, recruitment and auto all down in significant double digits for companies across the board. Recent ad spend estimates (good rundown by PaidContent's David Kaplan) keep going south with the consumer economy, both print and online.

As online revenue growth numbers softened to barely positive or negative, newspaper CEOs changed their emphasis, talking about emerging more strongly in the hoped-for recovery. Now, with economist estimates that we're going into a deeper recession, no one can predict when a recovery might begin, but spring or summer of 2009 look the most optimistic. That means that 2009 could turn out worse, potentially significantly worse, than an awful 2008.

It was supposed to hit $1 billion this year, but never mind. Unlike other social networks, MySpace is actually making a profit. The company now employs 1,600 people worldwide, compared to 150 in October, 2005 — more than a tenfold increase.

Arbitron has trailing a twelve-month revenue of $340 Million and has a market cap of $1 Billion dollars. Recent quarter balance sheet and income statements look much more unstable. Arbitron's current ratio is at 0.6, which means short term liabilities within a year are twice more than its current assets including cash and account receivables. Pay close attention to the return on equity portion, total assets appear at $172 million and liabilities at $160 makes $12 million and ROE appears at 60 percent. Other end total assets portion has $39 million goodwill and $1 million intangibles; if you ignore the goodwill portion this company has $27 million negative equity. Now can you measure the ROE and long-term debt to equity?

Monday, President Bush signed into law the Pro-IP Act, which further criminalizes consumer behavior and appoints a new “Copyright Czar” to oversee enforcement of the new measures. The law triples damages in copyright infringement cases, allows the government to seize property used to usurp a company’s copyrights (hang onto those laptops), and makes each song, movie, or other piece of stolen content a separate criminal offense. (So somebody found guilty of pirating an album with ten songs will be guilty of ten crimes instead of one). The law is so over the top that even the Department of Justice opposed it.

News that Newsweek is leveraging the experimental Kindle (AMZN) to put together a package of its best election coverage over time, and making it available as a Kindle "book,"  selling it for $9.95, shouldn't be that significant. The news, in Richard Perez-Pena's Monday New York Times article, is that Newsweek isn't simply re-purposing whole its weekly editions.  By exercising some selectivity -- dare we call it editing -- of content produced over time, it is stepping out of the pack.

DEBT

I decided to buy more shares of Sirius XM (SIRI) Monday. Am I concerned about the long-term debt of the company? Of course I am. I had reduced my position considerably, and have given it a lot of thought.

As a person who dedicates most of his free time to following Sirius, the news of satellite radio is my business. One story in particular has been released and re-released for the last several days by several different media outlets. I’m referring to the news story of Howard Stern and the attack on his reach.

The consolidation, failure and radical reshaping of companies across all industries–led by automotives and financial services–will change the post-recession advertising marketplace. So will the continued–albeit slower–growth of online and other digital platforms, although these new revenue streams will not ramp fast enough to offset cutbacks in advertiser and consumer spending. Just when media and entertainment players are beginning to comprehend the magnitude of the retreat and shift in ad dollars, they are confronted by signs of a deepening consumer crisis.

But that's fewer than the people in this online group that say they're cutting back elsewhere; 63 percent say they're doing less driving, 60 percent are doing less shopping, and 60 percent are vacationing less. Players throughout Hollywood are hoping movie going will be considered an affordable respite from the depressing reality of the economic situation.

Last month investors were saying “Wake Me Up When September Ends” in hopes that all of the turmoil in the financial markets was just a dream. October came, and the story was still unsettled. Monday, it was hard to find a stock that was down. Across the board, virtually every equity saw a boost in trading as a solution to the financial crisis seems to be at hand. Sirius XM Radio (SIRI) enjoyed a pop of nearly 20%, and while it is far from recovering to levels of a year ago, it is at least a respite in what can only be described as a depressing trend.

On most days, news of a 20% gain would be great. It may mean that a company has made some major news in some way, and that the company has a bright future. In this market, such a gain is not that big a deal. The market is a roller coaster, and exhibits symptoms of being bi-polar. Prices have been at extremes. Extreme lows followed by extreme highs, only to fall down again. The cycle is tiresome, and shakes the confidence of everyone. It is hard enough to find quality investments. Throw extreme volatility into the mix, and there is little surprise that a 20% gain does very little to instill confidence on an overall scale.

Overall, his plan includes some of the most lethal tax increases imaginable, including a jump in the capital-gains rate. He'd expand government spending massively, with everything from new public-works projects to increases in foreign aid to a surge in Afghanistan - plus hand out a token $500 welfare check that he calls a tax cut to everyone else.

In July, thirteen of the top twenty five Internet advisers by media value were classified as financial services companies (via TNS Media Intelligence). Where we are today is a different place. The old rules don’t apply. Many of the big financial companies that were buying up internet ad real estate are gone; bought out, sold out or shut down. Those that remain may or may not pick up spending to fill the void. One theory says they will – a rush to reassure the market and address consumer fears. Another theory says they’ll hoard cash, control non-critical spending and remain cautious.

If we all thought the merger process of Sirius and XM brought interesting times, imagine all of the comments that will come if Chrysler and [[GM]] pull the trigger on a rumored merger/acquisition! One thing that may be certain is that the auto companies can cite a “failing business” as a reason that such a deal should be approved.

Clearly, the purge extends to the Internet and Silicon Valley, where companies from Google (GOOG) and Apple (AAPL) to the smallest start-up are getting their first bitter taste of mainstream angst. Some of last year's double-digit online advertising growth that was halved in the second quarter is beginning to flat-line. Not even big media can find shelter in the folds of escapist entertainment for the dreary masses, with one-third of their revenues tied to softening advertising dollars. Deutsche Bank analyst Doug Mitchelson Thursday lowered operating cash-flow estimates for the entertainment sector, which will barely budge from $34.8 billion in 2008 to $35.3 billion in 2009.

In early summer 2007, we looked at media companies to determine who was the king of digital media and then used the multiples and figures from each of the publicly traded companies to forecast the value of NBC…

Viacom said it now expects its third quarter earnings (excluding special items) to come in between 53 and 55 cents per share, while analysts have been expecting Viacom's earnings to come in at 67 cents a share (excluding special items) for the quarter. And worse, the company lowered its earnings expectations for the full year to "mid single to low double digits" down from previous expectations of "low double digits." Viacom reports its full quarterly earnings on November 3rd.

F2Q09 Earnings Call