How is it that people who make the media know so little about the media business?

True, Aaron Sorkin, the creator of HBO's new series The Newsroom, is in the entertainment business and not the news business. But still, it doesn't seem that far afield for him to have gotten the memo about how the crisis in news is no longer moral (what a luxury!), but existential.

The existence of all newspapers, including the New York Times and Washington Post, is in serious doubt. Television news has become more stage-set than information-gathering business. Even digital news, which has wreaked havoc on all other news, finds the advertising revenues that support it dwindling (or failing to grow).

The next phase of news, mobile delivery, promises to be even more of a financial straightjacket. Indeed, revenues of the news business as a whole have shrunk in the last few years by depression-size double digits.

"It's advertiser-supported television," Sorkin's anchorman character, Will McAvoy, trying to be the voice of reality, says acidly to one of his moral challengers. He should only be so lucky.

There's a film conceit that says that facts or reality don't really matter in the context of a coherent celluloid world. All film fiction is unrealistic, but the power of film creates its own reality – if the irreality is large enough, it becomes more believable than actual reality (as with, for instance, the inventions in Sorkin's Social Network). The Newsroom sure puts a lot of pressure on that premise.

Sorkin's show is set in a cable television newsroom. But it is not even, really, cable. While it makes a few bows to CNN (itself a lost world), The Newsroom is more clearly network news, with its evening news schedule, its authoritative anchorman, and its constant evocation of Murrow and Cronkite – and its certain belief that the evening news is (and, perhaps, it once was) the center of the nation's consciousness.

It's not even that Sorkin's problem is that the internet has transformed the news business over the last eight or nine years (though every reference to blogs or Twitter is a tonal pothole); or that Fox has transformed the industry over the last 15 years. Sorkin is out of date by 25 years, when real estate developer Larry Tisch took over CBS and began the gutting that has continued at all network news divisions ever since.

Let's be clear: 25 years on, there is no network news-gathering operation. There are no foreign bureaus. There are no (or paltry few) correspondents. There is no newsroom. There's a much-reduced band of very young "producers" rewriting AP copy and whatever they can find on the internet. Oh yes, and there are no anchormen – save for Brian Williams, an unsettling imitation.

So why is Sorkin here, treating today's television news business as though this were 1976, when Paddy Chayefsky's Network, with William Holden and Faye Dunaway, about the moral collapse in television news, was made?

That's probably one reason: because Sorkin, like every other television writer who feels guilty about being a television writer, takes Paddy Chayefsky for his patron saint. Another reason is that movie people, along with many other over-compensated people, look at news personally (partly, because it's often about them); news is about a world they believe they have made, and on which they should and can have more influence.

This is why such people often dream about and sometimes do buy newspapers. Aaron Sorkin is working out his heroic fantasy of being in the news business in The Newsroom.

Rich men get to be publishers because people indulge them (as well as indulging themselves). Likewise, Aaron Sorkin, being the leading serious writer of modern television, gets what he wants, no matter how occasionally silly. The script for The Newsroom has been going around in media circles for several months now – the subject of puzzlement, if not derision. Almost uniformly, everybody in the television business has been shaking their heads; they recognize the indulgence.

Anyway, so what is the harm, really – a bad show by a good writer?

For one, it pre-empts the possibility of a good show about modern television. How much more interesting and revealing this show would have been if all of the liberal blah-blah here and the Ivy League newsroom nebbishes had been replaced by more current conservative agitprop and rightwing message enforcers. That's something we haven't seen and ought to see.

For another, it obscures the real story and real drama. The problem with news is not a quaint moral cowardice. The problem is that the form itself is in radical transition. We don't really know what news is anymore. The people to whom we are delivering the news, not only know it already, but they have shared it at a light speed that the news business itself, built on its efficiency, can never match. We don't even know if there is any need for news – or, at least, we don't know what the news needs from us news people.

And maybe most damaging, people in the news business, all deep nostalgists, actually believe this stuff – this drippy version of themselves. The Newsroom extends their distance from the business they actually work in. Television-programming folks may already regard this as a failed show, but all the people obsessed with the news business – all the people in the news business – are rising to the occasion. The Newsroom has reaped a press bonanza; there isn't a serious press outlet that hasn't covered it.

And if there are many respectful quibbles about the nature of Sorkin's preachy drama, there isn't anyone who's saying, it's just not true. This world doesn't exist. What's he smoking?