NEW YORK (TheStreet) -- Forget new media, old media and all the media in between. My question is: When it comes to making money by putting words on a page, is there anything left in media businesses at all?
Never mind slogging through the dark and stormy East Coast weather over the past couple of months; my annual spring trek through text-on-page media companies' annual statements has been a hate mission like none I can remember.
Save for a major exception or two, which basically boils down to Facebook (FB - Get Report), 2013 shaped up to be the year when, no matter which large media company tree I climbed, it sure felt like big limbs were about to come down.
Over and over again, there were stubborn, fundamental, multi-year trends of near-zero net earnings, wonky or feeble operating performance and truly dubious management calls, indicating some publishing companies are facing even dimmer prospects ahead.
Here then -- if you have the guts -- are my ghoulish snapshots of my big wander through what has become a dark and chilly media forest.
New Media No Better Than Old
Even after nearly 10 years of migration to digital platforms, the annual performance of traditional print media companies is simply awful. The year 2013 featured an "Annual Profit Margin Less than Zero" Club including, as far as I can see, Lee Enterprises (LEE), GateHouse Media (GHSEQ) and The E.W. Scripps Company (SSP). And let's keep in mind that the "Pretty Darn Close to Zero" Club -- where net margins were effectively at or below the 5% global inflation rate -- is also jam-packed with such storied brands as The McClatchy Company, News Corp. (NWSA - Get Report) and The New York Times (NYT - Get Report).
Even more ominous, the publishing and media firms that actually managed to show profits still moved in the wrong net-margin direction year over year. Gannett (GCI - Get Report), Journal Communications (JRN) and Daily Journal Corporation (DJCO) all saw profit margins slide from 2012 to 2013. Gannett, for example, saw profits fall by 9% year over year.
And 2013 was a bull market. How does that happen to advertiser-driven businesses?
New media companies were absolutely no healthier. No less than AOL (AOL) -- which, let's keep in mind, features such top Web properties as The Huffington Post -- is also a card-carrying member of the "Pretty Darn Close to Zero" Earnings Club. Believe it or not, this Web bellwether somehow spent roughly $2.2 billion of the $2.3 billion it made in 2013, leaving just $92 million in profit.
Does anybody see the miracle of the frictionless, no-cost media Web? I do not.
And recent announcements from AOL sounded alarms that profits will become even harder to come by. CEO Tim Armstrong made much media hay with his rollout of the AOL ONE automated marketing platform several weeks ago.
"ONE will be the first platform that empowers brands with a holistic view of the consumer's journey through the marketing funnel, and makes that insight actionable, in real-time on the platform," was the company spin.
Sure, that sounds cool. But AOL ONE is basically an automated ad buying and selling algorithm. It's remarkably similar to the automated trading platforms that have taken over -- and decimated the margins at -- large financial markets like the New York Stock Exchange and the NASDAQ.
The Alarm Bell Sounds at Yahoo!
AOL is far from the spookiest tree in the new media forest. Search giant -- and now, more and more, entertainment company -- Yahoo! (YHOO) had a simply miserable 2013. Not only did revenue fall from $4.9 billion to $4.6 compared to 2012, but profits fell by 66%.
Some investors argue that management moves were a one-time factor in that fall. And its 26% profit margins are both healthy for the Web and up from the roughly 24% margins in 2011.
But let's be honest, top revenue was still down from 2011. And Yahoo! still made dramatically less than it did in 2010. Sales are down by almost 27%, from $6.3 billion over the last four years.
That leaves the biggest, darkest new media tree left: Google (GOOG - Get Report). Its performance is just as suspect. Sure, revenue continues to climb year over year, with gains in the 18% range over the past half-decade. But net margins have been steadily ebbing since 2010 -- starting north of 27% and now down to about 24%.
Even more worrisome, operating margins -- that is, the lifeblood of fast-growing Web companies -- continue to slide. Operating profit was roughly in the 40% range back in 2009. By 2013, it was down below 24%. And that is basically nothing compared to the 80% operating margins found in the late '90s software business.
To put a price tag on all this uncertainty, investors are staring at nearly $420 billion in equity-traded market cap that has either no profits, diminishing profits or diminishing operating margins. Said another way, value on the scale with gross domestic product of Austria is simply melting before our eyes, like some growler calving from the Antarctic shelf.
Isn't it time, friends, we finally admitted that the Web is not as efficient as we thought it was? It's not as profitable as we expected it to be. And it's as much to blame for our no-growth economy as federal policy, global infrastructural shifts and our silly short-term management thinking.
Go look at the numbers yourself. And you'll see the real investing thesis you should pay attention to: there is nothing new about new media, except it's a new way to lose money.