2001 proved there is no such thing as a free lunch, if there was ever any doubt. The repercussions of the dot-bomb, the attendant advertising-market collapse and terrorist-fueled anxieties made last year a true annus horribilus that won't be easily shrugged off.

Certainly no one doubts that a market correction was needed. The days of AOL taking over Time Warner have well and truly gone, as is Gerry Levin, the CEO that made that deal. It's inconceivable in today's market that a Yahoo! could use its stock to buy a major media conglomerate, such as ABC Disney. But whereas the boom days of the dot-stocks are gone, the financial fallout of the revolution isn't over yet.

The debt funding that was so accessible to cable operators, dotcoms and others came with a heavy price tag: once the economic barometer changed, this cheap money began feeling like a millstone. TV and cable companies suddenly have no flexibility or maneuverability to weather the fallout of the burst dotcom bubble. Their only option to dig out of the financial hole is to sell promising - even profitable - assets into a down market, thus drawing a vicious and debilitating financial circle. And if that doesn't work, they face bankruptcy.

NTL, for instance, has put it's lucrative UK broadcast transmission business on the market, but so far bids have come in well below expectations, and at year-end the sale seemed to have been shelved, pending talks with bond holders. Kirch Media, after extending itself to create an empire worth floating, is now facing a cash crisis and must find a recovery route for its core broadcast business to save its pay TV investment. Once-proud pan-European cable experiment UPC has been humbled, its CEO has been asked to leave and its shares now trade as a penny stock. The white knoght that is John Malone's Liberty Media comes with a dark underbelly for public shareholders who now find themselves at the butt end of a financial restructuring for UPC, which includes issuing even more debt with more senior creditors added to the financial food chain.

Some Opportunistic moments appeared at the end of the year: most of them spearheaded by Vivendi Universal mastermind Jean-Marie Messier at the expense of Rupert Murdoch's News Corp. Having sealed an investment-and-technology alliance with soon-to-be U.S. DTH powerhouse Echostar last month, VU clinched its sought-after U.S. distribution deal by buying out the entertainment assets of Barry Diller-run USANetworks to create VU Entertainment. On those coat tails, Liberty Media swapped its unprofitable positions in Multithematique for key strategic relationships with USA Interactive and Vivendi Universal.

In the media-mogul-stakes race, certainly Messier's stock is on the rise, especially after Echostar did an end runaround Rupert Murdoch, snatching U.S. DTH prize DirecTV.

On the whole, a quick replay of the year makes for pitiful reading and lays bare the executive arrogance that was pervasive in a climate of easy money.

From publishing to television, this ad recession is the worst in more than a decade, with Europe's largest ever year-on-year decline in overall TV expenditure. Germany's RTL, Europe's largest broadcasting group, has issued four earnings warnings and now concedes that in the region's to markets (UK, France and Germany), advertising will decline at least 10%.

In the UK, leading independent broadcasters Carlton and Granada have received provisional approval to merge, but as media consolidates around them, their own merger may prove too little too late. In a time of a collapsed ad market, both are pouring money into a DTT experiment that has far from proved its viability as a stand-alone pay TV platform.

On the pay TV front, Vivendi Universal's new guard completed urgent consolidation in Poland and Scandinavia and has gotten the ball rolling for similar moves in Italy. In Germany, however, the saga goes from bad to worse. Kirch continues to search for remedies for Premiere World DTH service and lost two chief executives in the process. Kirch, Malone and Murdoch are still eyeing up each other on the dance floor for control of the country's still-promising subscription TV market. But who will wind up controlling what is anybody's guess.

On a global scale, Murdoch's imperial vision of a DirecTV-anchored Sky Global has evaporated, largely into the hands of VU. The remaining rag-tag holdings of far flung DTH businesses are certainly not ready for a prime-time IPO. The only bright star remains the UK's BSkyB, which this year started putting together the building blocks to make interactive TV services into incremental revenue streams.

Likewise, broadband has become a priority for cable operators. Significant broadband deployment, however slow the pace, is finally making streaming and VD a genuine business opportunity.

Further afield, AOL Time Warner finally consummated a distribution deal with leading Indian programmer Zee TV, while News Corp. and AOL TW continue to make slow but steady inroads into China.

The dump truck-sized communications-industry reality check has drawn the focus back where it needs to be: on selling subscriptions to services that people want to pay for, and selling airtime on shows that advertisers want to pay for. The rest is down to letting strong managers, not Wall Street, run your business. 2002 will not be easy, but media managers would do well to take a page from Ebenezer Scrooge and learn from history past.