Going Digital, a Necessary Hazard

We see it everywhere in media. The footrace. The footrace to switch to digital. And for the most part, every one of these companies is losing.

It is absolutely true that the New York Times (NYT - commentary - Cramer's Take), for example, is knocking the cover off the ball in interactive. The acquisition of About.com has paid for itself given the shrewd management of Martin Nisenholtz, NYT's senior vice president of digital operations, who has distinguished himself as one of the best interactive chiefs out there.

This morning we see E.W. Scripps (SSP - commentary - Cramer's Take), one of the most advanced companies out there for the Web, report a terrific number and a nice profit from digital.

The problem in both cases is that the profits are dwarfed by the regular businesses. They need to make acquisitions in digital to make them grow faster, and there's not enough out there to buy.

The Scripps/NYT dilemma is even worse at the Disney/CBS/NBC level because none of those companies is willing to make the move that News Corp. (NWS.A - commentary - Cramer's Take) has been willing to make to boost exposure. Everyone's so hurt by the twin desire to preserve near-term earnings and the recognition that digital is never going to be as profitable as a big hit series.

That's a huge problem with the Web. With the exception of Google (GOOG - commentary - Cramer's Take) (and to a much lesser extent Yahoo! (YHOO - commentary - Cramer's Take), as we found out last week) the Web is small potatoes. Digital is small potatoes. The companies trying to innovate to the Web are just throwing any old thing up there to make it feel like they have a presence.

But no one is willing to say the truth, which is that the Web makes less money for these institutions than anything offline and the more money that is put into it -- unless it is done like News Corp. -- the less it helps the core business, which is much more lucrative.

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At the time of publication, Cramer was long News Corp. and Yahoo!.

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