Since the advent of cable TV, people have been streaming away from normal network TV with its local affiliates as well as away from the few remaining independent local stations. Instead, they get their news, entertainment and other information primarily from cable stations that are national or international in nature.

Our own viewing preferences tend to support this: Bloomberg, CNBC, MSNBC, CNN and Newsworld International tend to be where we get the bulk of our news. Most of our local information comes from the LA Times, which we read online as well as a few civic affairs programs on KCET (public TV) and KCRW (NPR radio). We don't go to the network affiliates -- either on radio or TV -- for much in the way of local information. The lone exception is traffic information, but the capability of delivering this wirelessly to a vehicles' navigation system already exists and is likely to become mainstream, thus negating even this simple need.

In entertainment and even sports, there is very little local content of any kind. We admit to being rather boring. Most evenings our TV (if it's on) is tuned to Law and Order reruns on TNT or USA. Being from a large city, we find that most sports programming is available on at least one of the cable networks.

In our previous residence, we enjoyed satellite TV for several years. It didn't bother us that for many of those years we watched network affiliates from other cities. Why should we have cared? Other than the local news -- which is a joke -- their schedules were identical to those of the network affiliates in Los Angeles. The stations of course did care, because they want to have a stranglehold on advertising in their local areas. They got the congress and FCC to force our satellite TV company to start providing "real" local channels. Increased the cost for us, reduced the profit for our satellite company, and accomplished nothing other than forcing us to now ignore advertisements for used-car dealers in LA rather than those from other part of the state.

And all this is against the backdrop of the FCC no longer requiring stations to provide any "public service" content.

Yet the moron from Infinity says what we really want is local content.

What's sad is that he may even believe this. Unlike the lobbyists who forced "local channels" back onto our satellite lineup, whose motives were clearly self-centered and had nothing to do with providing real local services, this guy is trying to run a business based on the presumption that there is a significant market for what he's selling. Were he to acknowledge that there is a problem and claim to be seeking a new approach, we could at least respect the guy. But from our perspective as investors, we have to put him and his company in the "loser" category.

So where does this end?

Unfortunately, the FCC will probably continue to defend the rights of local broadcasters to a monopoly on advertising in their local markets. This will occur even as local content effectively disappears. In many smaller markets even the news is increasingly just a re-hash of network news feeds and this trend will continue.

The big networks and other content creators will increasingly move their better content away from the fragmented and difficult world of the network affilates and into their cable channels which are national in nature.

Local TV and radio will continue to exist, but will be increasingly marginalized, unable to even afford most premium content.

The companies that own these local broadcasters -- primarily Viacom/Infinity (VIA) and Clear Channel (CCU), but also others -- will face huge writedowns on the value of their broadcast spectrum assets.

Local advertising will continue to move away from local affiliates and into cable, which allows advertisers to target not only a specific region, but even a specific neighborhood. Our favorite neighborhood hamburger joint is the model for what local advertising can and will do. The owner has built his entire business on local, targeted cable advertising and is a vocal proponent of the medium. He doesn't advertise in any other medium and doesn't plan on changing.

National advertising will move to cable as well, where issues of local control, local standards and varying schedules will not impact them.

That said, we are not particularly interested in either SIRI or XMSR as investments. We think they are both facing huge costs for buildout, promotion and content. In addition, as Fred Hickey pointed out recently in his excellent newsletter The High Tech Strategist, satellite is likely to face competition from internet radio in coming years. This will be furthered by the ongoing development of the 802.11 standard and deployment of wide area mid-range high-speed wireless networks to supplant existing 802.11b hotspots. This development could make wireless internet radio in your car a reality in most urban areas. (For more on the importance of the 802.11 standard, see Bill Gurley's comments on the matter.)

So, while we have doubts about the long-term viability of existing satellite radio players and will have more to say about them in the near future, it is nonetheless obvious to us that the current media companies are stuck in an inenviable crunch. They can't make themselves real national content providers without incuring the wrath of their own affilates and of the FCC, but they also can't continue to compete with true national content from other sources. Rather than looking for an innovative solution, they're sticking their heads in the sand. Whatever happens to the satellite companies, the fact remains that these guys are going to get run over by a steamroller of new technologies and there will be significant costs to them and their unfortunate investors.