07/23/2009 05:12 am ET Updated Dec 06, 2017

Will CBS Be the Wal-Mart of Media?

Across all segments of the economy -- from auto dealerships, to retail shelves, to entertainment venues, to sports events, and to media – we are experiencing an inversion of the supply/demand equation that has spurred economic growth for the last six decades, a period during which demand has exceeded supply in most sectors of the mass economy. And while most economists and investors believe consumer spending will be re-accelerated through government intervention in the economic system, consumers have become far more sophisticated in seeking out low-cost providers in almost every business category, resulting in downward pricing pressure even as individual consumption increases. For the first time since the 1920s, it's very possible that the pattern of inflationary growth following a recessionary period may be broken. Although inflation is anticipated as the recession fades (although I do not believe the recession will actually fade until mid-2010), only a few consumer categories – where there is true pent-up demand and limited supply may actually experience significant pricing inflation.

The same principles apply to business-to-business spending and, of all b-to-b categories, media and advertising is the least likely to see a return to pre-recessionary growth patterns. In this new over-supplied economy, low prices become all powerful, and being the low-cost provider in any category represents a powerful and compelling market position. Which companies are best positioned in media and advertising to capture this valuable ground?

Among all major media companies, CBS is best positioned to emerge as the low-cost leader. While the company might be loathe to acknowledge this reality or even take measures to move in this direction, the combination of quality original content; comparatively mass television audiences; an abundance of local market inventory across television, radio and outdoor media; high reach online media under the CNET umbrella; plus the "ubiquity" online content distribution strategy the company has followed, all lead to the conclusion CBS has either intentionally or accidentally pursued a Wal-Mart model.

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