• by Dave Morgan , Featured Contributor, January 4, 2007

One of the perks of being a columnist in this industry is that I get to write about what may be in store for 2007. Apologies to those already tired of all of the 2007 predictions. In deference to you, I will keep mine brief.

Newspapers will have another tough year in 2007; much worse than 2006. Audience fragmentation and digital competition are now starting to erode core revenue streams for these folks. In the coming year, at least one major metropolitan daily newspaper will be shut down, and many, many more will undergo major restructuring and layoffs as these companies come to grips with the fact that their national, retail, and classified businesses are not coming back and that their digital revenues will not come fast enough to continue to support their old cost structures. The newspaper industry will have a long life, but it is going to have to right-size its businesses and endure some very painful restructuring to make it.

Television networks and local affiliates will do much better coping in 2007 compared to newspapers. While their transition will not be smooth either, television cost structures should transition much more smoothly than print cost structures, as IP-video and video advertising have their day on the Internet.

We will see defensive consortia arise from a number of traditional media companies that are too confused by the digital media revolution to do anything other than circle the wagons with others in misery. These companies need strategies and focused execution, not a world of cross-company meetings, too many lawyers, and committee-driven initiatives. Not only will they be unlikely to succeed, it is unlikely that Wall Street will like them either.

There will be several major privacy-related blow-ups this year. The ease of capturing, sharing and accidentally leaking consumers' personal information and the presence of even a few bad or careless actors in the marketplace will insure that 2007 will bring us some problems in this area. Fortunately, the market and consumers are becoming more sophisticated in dealing with these problems. The bad actors will be caught, the careless will lose their jobs, and-hopefully--we won't end up having to deal with some hurriedly passed, reactive legislation.

The financial markets will once again make darlings of Internet companies, and as before, sometimes for all of the wrong reasons. We will probably see a number of Internet companies go public this year, and we will see a lot of acquisition activity. We will also see lots and lots of start-up companies continue to raise lots of capital. We will not see a Bull burst. We will see underperforming companies go out of business--as they should. I had a front row seat in the last Internet growth spurt, and it WAS a Bubble. It was financed by individual investors driven by hungry bankers and analysts, and the Kool-Aid that we all wanted to drink. This is not where we are now. Now, our industry is full of fast-growing companies with strong revenues and profits, and the very best talent in the world. This is going to be a great year.