A sense of dread ails the opinion-makers

When I give speeches to groups of entrepreneurs, I am invariably asked why the media is so gloomy. I normally reply that journalists believe bad news sells. But I think there is a new, more desperate and personal element to the pessimism: journalists are petrified that their very livelihoods are under threat.
Last weekend I attended a celebratory dinner for hacks at my old Oxford College, Magdalen. Seventy or so writers turned up – foreign correspondents, editors, documentary makers, freelancers and so on. The mood should have been upbeat, but the speeches were doom-laden. Most of the guests I spoke to were worried for their careers and the very future of their profession. They see the local newspaper industry in meltdown, leading dailies and magazines shutting across the US, radio and television broadcasters struggling, and cuts everywhere. The economic downturn has hammered advertising like never before.
But the real killer is the internet: Wikipedia, blogs, Google and all the other free websites are smashing the economics of traditional media organisations. Major outlets have to support loss-making or break-even online operations that are eviscerating their print or broadcast core. Few of the pure new-media players fund any content creation. And contributors are happy to submit material for nothing. Revenues, profits, margins and cash flow have collapsed incredibly quickly for almost all established publishers and broadcasters. Their business models are broken. The breadth, choice and quality of content are likely to be slashed as owners cut editorial budgets to survive.
So no one should be surprised that most articles and reports on the credit crisis and current conditions are bearish and depressing. The authors are probably expecting the sack – or at least a pay cut and a heavier workload. I am reminded in a terrifying way of how in the 1980s, when I worked in an advertising agency, there were highly skilled craftsmen at work – typesetters – who handled the pre-press element of a print advert. That line of work has disappeared, blown away by the relentless advance of technology.
The same dark effect could be at work in banks and financial organisations. Many are full of executives waiting to be fired. I keep calling firms to speak to a contact, only to be told they no longer work there. Bonuses and expansion are history. That whole way of life is over. No wonder they are not doing much lending. This pervasive sense of dread has spread to analysts, economists and other commentators employed in the City of London and Wall Street, who offer opinions on the future of markets and business. And, of course, their views are going to be bleak, since they are worried about being laid off, meeting their bills and wondering what the heck they are going to do with themselves now the music has stopped.
The scale and profitability of the media and banking industries were wholly unsustainable. In recent years the US financial sector generated more than 40 per cent of all domestic corporate profits. Historically, newspapers and broadcasters could make operating margins of more than 20 per cent, most of which was free cash flow. But the inevitable reckoning does not make the downsizing less painful. It is having a disproportionate effect on the morale of the educated classes, and therefore our outlook on the world.
There are no simple or swift cures. Many hundreds of thousands who lose their jobs must reinvent their lives and find new vocations. After the crash in 1987, various financiers I knew became farmers, painters, shopkeepers, novelists and philanthropists among other occupations. I suspect few ever regretted the move. It can broaden horizons and lead to a healthy realignment of priorities. Old media must adapt to survive, by any means necessary – mergers, cost cuts, efficiencies and ingenuity.
Banks must fix their balance sheets and revert to their core activities, undertaken in a prudent manner. All this dislocation is hard to take, but there is little choice. Moreover there will always be new opportunities, whatever our temporary difficulties