The old consumer of media was happy to remain at home or on a commuter train with a copy of the New York Times or a TV set with a cable box, and perhaps a TiVo machine. According to studies from Nielsen and other research groups, these people spent as much as six hours in front of their TVs. Some listened to drive-time radio and had a subscription to Time magazine. They were passive consumers of media. Information and entertainment flowed to them inbound. The most outbound activity they might display was a letter to the editor.

The digital omnivore is an expert at two-way communication. Video games are set up on the internet so that many gamers can play against one another in real time. People with smartphones can talk to one another, text or share observations and opinions with one another on Facebook and Twitter. They can watch movies and vote on whether they like them, even scene by scene.

It is important for markets to study the new class of digital omnivores. Comscore points out:

Understanding today’s multi-device consumer, or what is known as the “Digital Omnivore,” will be increasingly important for advertisers and publishers in 2012 with an eye on the two critical factors to building effective digital strategies: the incremental effect and platform cannibalization.

What has not been proven is whether advertisers will get any more in terms of purchasing activity and returns on their investments from new-age consumers, compared to what they got from a consumer who is stationary in his living room. Omnivores may eschew marketing messages because they can. The omnivore can watch video without commercials, or can skip over them. TV viewers cannot without a lot of effort. Neither can newspaper readers. Whether they read the advertisements or not, the messages are there on most pages.

Omnivores also consume media that have no advertisements at all. One of the criticisms of Facebook is that mobile versions carry no ads. Many videos on YouTube also do not run commercials. Twitter has not found a highly effective way to embed marketing messages in tweets. Omnivores may spend six, seven or eight hours on their devices. Their new habits, and the change in the way that marketers try to take advantage of those habits, may not help sell products and services any better than old media did. As a matter of fact, consumer choices in media are now spread across so many platforms that the consumer may be extremely hard to reach, at least effectively.

Markets were better off with the couch potato. He was not a moving target.

Douglas A. McIntyre

The analysis of display advertising market share rarely mentions the tier of sites below the largest ones by audience. Those most likely to be hurt badly, if they have not already been, are the online sites of old-line media companies. The New York Times (NYSE: NYT) has had trouble with its very modest online ad growth. Among sites measure by Comscore, it had 76.4 million unique visitors in December to Facebook’s 152.5 million. And Facebook’s audience continues to grow quickly. The New York Times’ does not. Gannett (NYSE: GCI), which announced earnings yesterday, has confronted the same challenge. Its increase in internet ad revenue last quarter was depressing and hardly enough to offset drops in traditional print advertising. It had 44.1 million unique visitors in December, despite the fact that it owns the giant national newspaper USA Today. Scripps Networks (NYSE: SNI) and the Washington Post (NYSE: WPO) are in a position that is just as difficult.

Facebook has not only started to squeeze out the major portals. It takes an ongoing piece of a market that has thousands of websites in it. This display advertising market, which appeared so promising just a few years ago, is hardly promising at all.

Douglas A. McIntyre

Netflix (NASDAQ: NFLX) has nearly fallen apart, according to Wall St. Yet, the service still has 20 million subscribers, which makes it one of the largest “cable companies” in America. Apple (NASDAQ: AAPL) TV and a similar Amazon.com (NASDAQ: AMZN) product have customer bases that could be nearly are nearly as large for platforms for premium video content.

The studios fear they face a business model pioneered by Apple nearly 10 years ago. iTunes became the leader, by a large margin, for distribution of songs. Its subscriber base was so large that it became irresistible to music publishers. That allowed Apple to dictate terms for royalty sharing.

The movie companies learned something from Apple. They have tried, and in some cases succeeded, to get Netflix to pay substantial sums for premium content. As the number of digital outlets grows, particularly on potentially huge networks like those built by Apple and Amazon, the leverage of the studios will fall away. Amazon has too many customers. That has allowed it to mostly tell book publishers what they can get for e-books. Rumored versions of Apple TV will allow it to gain a strong foothold in American living rooms.

Analysts have been quick to point out that the DVD business saved the sales of studios for a long time. Numbers show that the popularity of DVDs has declined sharply. One more outlet that favored the studios financially has begun to disappear.

The damage that digital distribution has done to the studios has been manageable for several years, at least when the financial statements of their parent companies are analyzed. But Apple, Amazon and Netflix reach tens of millions of people among them. They have powerful brands and customer loyalty. Apple and Amazon already have shown they can use their brands to sell multiple products and successfully introduce new ones. The studios will be in a situation like music publishers are, and the process may only take two or three years.

Douglas A. McIntyre

Shares in companies such as the New York Times (NYSE: NYT), Gannett (NYSE: GCI) and McClatchy (NYSE: MNI) moved up sharply early on. But those stocks are down between 10% and 50% for 2011. The balloon of hope that digital revenue and lower costs would rescue the industry has popped. Digital sales have not nearly matched the attrition in print revenue. Some newspaper companies have had difficulties driving digital revenue up compared to numbers from 2010.

The theory behind the aggressive purchase of newspaper stocks actually fails into three areas. The first is that large companies like the New York Times would make share market gains in the revenue from online ads and digital subscriptions — the so-called pay wall. The next is that newspapers could shrink their print subscription bases and retreat to geographic areas in which only subscribers who would pay premiums reside. The third, and most radical, is that some papers could discontinue seven-day-a-week delivery schedules. These papers could keep print subscribers if they only printed and delivered papers three or four days a week. Readers would go online to get news on the other days.

The weakness behind these notions has to do with the way people get news now. There are enough news sites, many of them local, that readers have a number of options when they look for news and entertainment content. The other expectation of publishers is that they could shrink their way to profits. However, print revenue continued to fall more rapidly than costs. Papers have to keep some level of newsroom staff in order to remain viable sources of local news. Presses still have to run. Trucks still have to deliver.

The hope that digital media would save newspapers turned out to be false. If anything, the availability of large amounts of information online undermined the industry as much as anything else.

Douglas A. McIntyre

The NYT local media group had $60 million in revenue last quarter, which was down about 6%. The Times has already taken a $152.1 million impairment for the division, a sign that it does not have much of a future. Considering the cost structure the Times probably employed at most of its local papers to keep them up to Times’ standards, their future profitability was at risk. However, Halifax Media will cut costs sharply to fit its model of inexpensive editorial.

Halifax Media knows how to bring expenses down to the bone, as many similar companies like Gatehouse and Journal Register have. Newsrooms at the papers these firms own are staffed by a very few people. “Citizen journalists” contribute free blogs. Full-time reporters record their own video and camera shots. It is a world of journalism that reporters and editors at the New York Times would not recognize.

The Times most likely could not stand the damage that would be done to its reputation if it cut a huge portion of the workers at its local papers. That would be a signal that quality journalism had met its match at the local level, even for the New York Times.

Local newspapers operate with several advantages. Internet competition in local markets is not as strong as its is on the national news stage. Local TV does not exist in some smaller markets. Many local newspapers no longer deliver seven days a week. Some have cut to three or four days, which forces readers to online editions.

The local newspaper business can be very profitable. But the costs to run these businesses must be very low. The Times was not willing to match what companies with comparable products will do.

Douglas A. McIntyre

Of course, many big public corporations also did very poorly. Several nearly destroyed their business and dragged down shareholder value with it. 24/7 Wall St. combed through the S&P 500 to find the best and worst managed companies in America for 2011.

Read: The Best Run Companies In America
Read: The Worst Run Companies In America 

To make a list of semifinalists, 24/7 Wall St. considered stock price, changes in earnings per share, major shifts in market share and changes in management, among other data. Once the initial screen was complete, we reviewed product launch success, financial results, success of new management and the performance of each company within its industry. The editors then sifted through the finalist to identify those that rewarded both customers and shareholders and those that caused these two groups the most harm.

Neither the best-run companies list nor the worst-run companies list includes a large number of corporations from any single industry. This indicates our methodology identifies well- and worst-managed companies regardless of the industry. Based on our criteria, the management of Starbucks did as good a job as the management of Oracle — two of the best-run companies. Similarly, Eastman Kodak management did as poorly as the management of American Airline parent AMR — two of the worst-run companies.

This is 24/7 Wall St.’s Best and Worst Run Companies of 2011.

Time Inc., like every large, medium and small print firm, has tried to move its subscribers from paper products to ones on PCs, tablets and smartphones. Publishers like the Wall Street Journal and the New York Times (NYSE: NYT) have had some success. They also have hundreds of thousands of customers who get printed versions every day. Advertisers have moved away from those print products to online-only media like Yahoo! (NASDAQ: YHOO) and Facebook. Print advertising’s market share of ad dollars shrinks each year.

Print companies must battle both the cost of physical products and the attrition of their largest advertising bases. They also must contend with large media, which range from CNN.com to ESPN.com to TMZ. The online content world is already almost too crowded for new media to enter in any force.

Time Inc. still has magazines with millions of consumers who read them via subscriptions and newsstands. The company cannot simply strand these customers and force them to consumer content online. Too many of these customers would reject such a move and argue that online media is not worth paying for in a world in which so much news and entertainment on the internet is free.

The costs to print and ship the number of magazines Time Inc. produces is well into the hundreds of millions of dollars each year. These magazines also have huge balance sheet liabilities. Their readers have paid for subscriptions upfront that are fulfilled by the publisher over several months or years. It is a contract that the publisher must fulfill once it has cashed each customer’s check.

Time Inc. would like to move magically from print to online, keep its current revenue base and have the advantages of the low costs of digital content distribution.

If wishes were horses, all the beggars would ride.

Douglas A. McIntyre

Publishers claimed that as the last recession deepened, their industry was in a cyclical decline. The industry would right itself financially when the economic trouble had passed. Most industry analysts disagreed. The problem was secular, they said. Online news outlets had taken away too many readers and too much advertising. Major newspapers had only a decade of life, if that.

The success of online subscription sales for some newspapers is the most positive change that has occurred. This is particularly true of the New York Times and the Wall Street Journal. They invest in news coverage that is broad and deep enough to make their content extremely valuable to large numbers of readers. Many subscribers recognize this value for these newspapers and are willing to pay to have access to articles online. This is an important point to consider since most online news is free.

24/7 Wall St. examined the fortunes of the ten largest newspapers in the United States by daily circulation. We have also looked at online visitors based on data from research firm Compete. What we found was that a small number of these properties have good financial prospects. The others are not much better off than they were at the depth of the recession, despite of the significant costs that they have cut from the business.

Google’s GAAP net income in the third quarter of 2011 was $2.73 billion, compared to $2.17 billion in the third quarter of 2010. The world’s largest search company reported revenues of $9.72 billion in the third quarter of 2011, representing a 33% increase over third-quarter 2010 revenues of $7.29 billion. And, Google’s strength beyond search expanded as the market share of its Android mobile OS continued to grow.

The New York Times said it would cut 20 people from its newsroom and more employees in other parts of the company. The firm’s digital advertising rose a disappointing 2.6% in the second quarter, which did not offset a 6.4% decline in print ad revenue. The company should have shown a better improvement in ad revenue because it owns some of the largest premium content websites in the country. Instead, the troubles of 2008 and 2009 have returned. Digital revenue cannot much help the deterioration of print sales.

Google’s results once again raise the contrast between the online industry’s haves and have nots. Online portals now have sales that barely grow. Premium sites like TheStreet.com (NASDAQ: TST) struggle to improve revenue as well. But Facebook has a quarter of all display ad revenue in the U.S. Google has two-thirds of the search market.

There is nothing particularly new about the Google and NYT results. But they are a reminder that part of the online industry has begun to die again — and this time there is no reversing it.

Douglas A. McIntyre

A new study from the Pew Project for Excellence in Journalism and Internet & American Life Project, done in conjunction with John S. and James L. Knight Foundation, shows that people look to newspapers to provide information on community events and local crime, government reports, housing and politics. Local TV stations are primary sources for weather, local news, and traffic.

The message from the research is that the extent to which local media help Americans to keep informed on national and international news is a poor investment of resources. Pew reports that “Newspapers (both the print and online versions, though primarily print) rank first or tie for first as the source people rely on most for 11 of the 16 different kinds of local information asked about — more topics than any other media source.” The emphasis of the point is on “local.”

Pew warns that the traffic to local radio and newspaper sites could be undermined by the rise of internet-only local news sources. This would imply that new services like Aol’s (NYSE: AOL) Patch may have success if the portal continues to invest in this initiative. Papers and radio still hold one advantage — they are the incumbents.

Incumbency is only as valuable as the effort to take advantage of it. The habit of local newspapers to provide national news as part of the primary reporting on their front pages and as a large part of their overall coverage is wasted. It lowers the amount of space, or at least the most visible space, for information that is most useful for their readers — at least according to Pew.

Newspapers and local radio may be able to retain or even increase their market presence, but only if editors move coverage toward what the consumer wants. That means abandoning the pretense that they are effective sources for news from outside their own markets.

Douglas A. McIntyre