The publishing world seems to be putting on an impromptu rendition of "Monty Python and the Holy Grail." First we had the scene with the Black Knight where the internet began dismembering old media and old media bravely told us "'tis but a scratch," as gouts of blood spurted out of the cash flow statement. Now, though, we may be to the scene with Eric Idle and John Young, in which Mr. Young bravely declares "I'm not dead yet!"
What's Old is New AgainIronically, it may be new media and technology that ultimately saves the day for old media. As consumers continue to buy up the Kindle from Amazon (Nasdaq:AMZN) and competing devices like Barnes & Noble's (NYSE:BKS) Nook, Sony's (NYSE:SNE) Reader, and Apple's (Nasdaq:AAPL) iPad, it looks like publishers may have finally accepted the reality that their future is digital.
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Sometimes, conventional wisdom is not so wise. Take the case of media giant Disney (NYSE:DIS) - the conventional wisdom is that the popularity and ubiquity of its brands (and its eternal appeal to kids) insulates it from economic conditions. That so-called wisdom bypasses the reality that it takes money to go to theme parks, advertising on networks trails off in recessions and movie production requires large upfront investments for uncertain returns.
Diversification Shows its AdvantagesThat said, Disney's diversified asset base has helped the company weather the downturn in relatively good order, and this quarter was another example. Revenue rose about 6% overall as strength in the cable and film business offset pretty iffy results in broadcast TV and theme parks. Margins likewise have stayed strong, even as the company lays out significant money for programming rights for ESPN. One note of caution on the margins, though. Successful movies like Alice in Wonderland can certainly boost profitability, but seemingly every studio has a dry spell from time to time and they are inherently impossible to predict (few studio execs would green-light a movie they know is doomed to fail).
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