Never one to let things lie Nick Denton held a "doom-mongering" summit of sorts at Gawker headquarters last night apparenty feeling that it was time for a "reality check" (more like a brutal intervention of sorts, actually) regarding how this economic downturn will affect the media world. The short version is that we are all kidding ourselves if we think that the sort of cuts we have seen these past few weeks are bad. Turns out Denton thinks we are a long way from rock bottom:

From conglomerates to internet ventures, executives should be planning now on a decline of up to 40% in advertising spending during this cycle. Instead they're sleepwalking into economic extinction — even those lean online ventures which were supposed to take up the mantle and preserve New York's position as a media capital.

Denton backs up his prediction by looking at a number of other countries that have suffered a credit crunch in the last 20 years (Japan, Sweden, Indonesia) arguing that their experience points to a steeper decline than that which U.S. analysts, who are basing their "models on redundant forecasts for the world economy as a whole," are predicting. People, Denton says, should be planning for the worst. Also, internet advertising isn't immune and political blogs are a bad investment. For a full explanation, including a lot of numbers and a slew of graphs (we are big fans of the visual aid) go here. Of course, being glass half full types we immediately turned to our numbers man John Carney for some sort of reassurance. It was not forthcoming.

Per Carney:

I think he's very, very right. If anything, he might be underestimating the trouble in ad revenue. [!!! Says us] I think we could see advertising drop off by more than half as lots of classes of advertisers — retail, banks, auto — come close or actually go bankrupt. Nick's projections account for a sharp recession but not mass insolvency that much of the economy is facing.

Smart publishers can use this as an opportunity, of course. If you have enough cash to get through this, it will be a great time to win over readers and build a great brand. That should position your website nicely for when ad dollars return.

Previously: Gawker Lays Off 19 Editorial Staff Including Moe Tkacik