NBC Universal Chairman Bob Wright tells B&C that this is the last business cycle where an old-line media company can afford not to have at least 20%-30% of its business in digital. But he also says the digital component is not yet sufficient to boost the bottom line of companies with only "average" performance in traditional businesses.
For a survey of the "state of the media" for the magazine’s Jan. 29 edition, Wright says that the media are generally strong, with some weakness in more narrowly-focused, ad-driven businesses.
But he says that "even the healthy are infected with a low-grade fever of confusion, which needs to be closely monitored and treated over the next few years."
He suggested that confusion is rooted in the changeover from a single-platform, or at least a more-limited-platform business to the explosion of digital delivery systems.
"The confusion stems from the decline in revenues from traditional business lines coupled with uncertainty about the best strategy for replacing them with revenues from new, digital-based businesses with lower margins, principally the result of start-up and overhead costs," he told B&C.
"This is the last business cycle in which a traditional media company can deliver good results without digital constituting 20-30% of its business," says Wright. "Three years from now, success will require your traditional areas to be performing at the top of their games while at the same time deriving significant income - not just revenues - from digital media."
Deeper into the transition things will even out, he predicts, with the digital margins eventually rising. "Until they do,’ he says, "average performers will be under pressure, since any weakness in their traditional areas will be difficult to fully recoup through digital activities."
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