• Wired, Tuesday, July 8, 2008 11:45 AM

Lehman Brothers analyst Anthony DiClemente published an "alarmingly bearish" report on the entertainment sector yesterday morning, Wired says, in which he claimed that the TV and film businesses would face a massive downturn in the next two years. Their model is broken, he said: Once captive TV and movie audiences are splintering thanks to file-sharing, digital distribution and the rise of Web-based services like social networks. DiClemente claimed these factors are eating into media companies' profits, which may never return.

"We believe the feature film and TV content businesses are on the verge of structural changes that appear to impact the core revenue and profits of entertainment business models," wrote DiClemente. "Content may no longer be king in the entertainment business, as distribution giants Apple and Google seem to prove again and again." He added that the television and movie studios' loss would be iTunes and YouTube's gain.

Wired aligns DiClemente's bearish outlook for the entertainment biz with comments recently made by TiVo CEO Tom Rogers, who recently predicted the demiose of network television, and Liberty Media chairman John Malone, who called the networks "absurd" for giving away content online for free.

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