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Has there ever been a less fun time to be a media mogul?

This was supposed to be a banner year for the U.S. media industry, with the happy confluence of a presidential election campaign and the Olympics. Instead, 2008 has been pretty much a writeoff.

Some parts of the industry - particularly local U.S. media - have seen their sales fall off a cliff and their long-term viability as business models called into question as a consequence of the shakeout in the financial services companies and car makers, two of the largest advertising categories.

"It looks like 2008 will be the first year in 48 years that TV-station advertising will decline in a presidential election and Olympic year," said Michael Nathanson, media analyst at Sanford Bernstein.

Rupert Murdoch, chairman of News Corp., one of the world's largest media conglomerates, told investors this month that automotive advertising has represented as much as 40 per cent of the advertising at his local Fox TV stations, and that category is down by 40 per cent this year, with some big advertisers such as imperilled General Motors cutting their spending by more than half.

"It is going to take time for that to come back or to come back from other sources or to be replaced," Mr. Murdoch said.

Sam Zell, the Chicago billionaire who bought Tribune Co. (which owns the Chicago Tribune, Los Angeles Times and 23 TV stations), told a conference in New York this month that when he took the company private last year he budgeted for a 6-per-cent erosion in newspaper advertising, which was twice the rate of recent years. Instead, he said, this year's sales have tanked 19 per cent.

As a result of the harsh environment and worries about media's growth prospects broadly, nearly every big U.S. media company has seen its stock price halved or worse over the past six months. The lucky few, Walt Disney Co. among them, have only dropped roughly in line with the S&P 500, down 35 per cent during the period.

For some companies with a heavy skewing toward newspapers - Media General, Belo, E.W. Scripps and McClatchy among them - the situation is even bleaker, with stocks off as much as 80 per cent or 90 per cent. And the meltdown has already affected media moguls such as Sumner Redstone and John Malone, who have been forced to sell shares in the companies they control at low prices in order to meet financial obligations elsewhere in their empires.

Mr. Nathanson this week offered a harrowing look at how the landscape has darkened for media companies. He notes that in the third quarter of the last U.S. election year, 2004, ad growth among traditional (that is, non-Internet) media was a strong 5.7 per cent over the previous year, thanks to the usual influx of political spending. Excluding Internet spending, ad spending across all traditional media in this year's third quarter was down 8.5 per cent, the sixth consecutive quarter of declining spending.

The challenge for newspapers is that their declining advertising share is in part a shift of ad spending to other media, but a portion of that loss is just advertising that has disappeared entirely, thanks to the advent of Craigslist, the website that allows people to place classifieds largely for free.

According to Craig Huber of Barclays Capital, classified advertising as a percentage of newspapers' revenue will decline to 26 per cent in 2009 from 36 per cent in 2006. Meanwhile, newspapers' share of total U.S. ad expenditures, according to Barclays, will have declined to 10 per cent next year from 20 per cent in 1999. (During the same period, the Internet will have increased to nearly 11 per cent, from less than 1 per cent. The other big gainer - advertising on cable networks such as CNN, ESPN, and Discovery Channel - will have nearly doubled to 10.3 per cent from 5.5 per cent.)

Even online advertising, the hot growth sector for media, is being revised downward by a little or a lot, depending on which analyst you ask. Sanford Bernstein & Co. recently lowered its forecast for next year down to 11 per cent from 13 per cent, while Cowen & Co. reduced its previous forecast of 13 per cent to a meagre 3 per cent.

Certainly there is evidence of this slowdown among some of the Web's giants: Yahoo, which commands a large share of the online display advertising market, last month reported a 64-per-cent decline in quarterly earnings and announced a round of layoffs. (Its co-founder Jerry Yang subsequently announced he is stepping down as CEO.)

And AOL, owned by Time Warner Inc. (which also owns Fortune, the employer of the author of this article), surprised analysts by reporting that its online advertising business in the third quarter had declined by 6 per cent.

Even mighty Google has seen the air come out of its lofty share price by 46 per cent over the past six months - though it still has a market value, at $91-billion (U.S.), that is roughly the same size as Disney, News Corp. and Time Warner combined.

The impact of the credit crisis on television advertising has only widened fault lines as the medium has scrambled to contend with both the battle for viewers' attention as video proliferates on the Internet and other digital devices, and the impact of ad-skipping video-recorders on TV audiences.

The downturn has intensified questions about the basic structure of the U.S. broadcasting system, with its dependence on one form of revenue - advertising - and long-standing laws that mandate that the bulk of local TV affiliates are independently owned.

Meanwhile, cable networks that gain subscriber fees have been drawing a bigger share of viewers and advertisers, and the Hollywood writers' strike last year - and the threat of another by actors - have contributed to a dearth of popular new programs.

As if this weren't tough enough, the prospect of a weak Christmas at retail stores further threatens one of Hollywood's cash cows of the last decade or so - DVD sales. Sales flattened at around $16-billion for DVDs in 2005 and 2006 and declined 4.8 per cent last year, to $15.7-billion.

How long will the bad news last? Most U.S. economists anticipate that real GDP growth will recover in the second quarter of 2009 (with all sorts of caveats attached, of course).

If that is correct, and based on how advertising has correlated to GDP in recent recessions, advertising would begin to grow again in the first quarter of 2010, Mr. Nathanson said.

The bigger question is the degree to which the media wipeout will imperil businesses whose future was already in doubt when the downturn hit. Recent weeks have seen some print publications, including U.S. News & World Report and the Christian Science Monitor, drastically cut back their publishing schedules, and several magazines fold.

In the meantime, there is plenty of gallows humour about when, and on what terms, Washington will be offering the media industry its bailout.

Richard Siklos is an editor-at-large at Fortune magazine