What is true is that (a) people don't want to pay enough for media content to pay everyone who wants to make media content. And (b) people don't want to pay for bland, CNN-style content.

(a) is arguably a problem. (b) is, I would argue, not.

- Jake

Friends come and go. Enemies accumulate.

If you remove ad revenue, the entire system breaks down. Most people don't want to pay for media content.

While many people are willing to pay something for content, I think that the overall point holds - quality content is more expensive than people are accustomed to paying.  Given a more general prosperity, that might change, but without advertising the current system would die a rather quick death and I'm not sure how much beyond YouTube videos would survive.

Government is all about the pooling of resources to support socially worthy activities.  I think TV, Magazines, and Newspapers are socially worthy activities, even in their current forms.  Their evolution and expansion without the straightjackets imposed upon them by advertisers may well make them more so.  

We don't expect a high-speed rail-network to get built on voluntary donations up-front.  Why should we expect a quality entertainment and news ecology to be built for free?