What can we expect from the future?

Samuel “Sam” Zell has an estimated net worth of ~US$3 billion, Forbes Mag estimated that he was the 68th richest American. he owns The Tribune Company, publisher of the Chicago Tribune and the Los Angeles Times, they own a radio station and about 23 TV stations across the US.  They’re America’s second largest Newspaper publisher with 12 significant mastheads. Since taking over The Tribune Company in 2007 with an $8B investment, Sam has faced double digit revenue declines. The Tribune Company filed for Chapter 11 Bankruptcy on December 8, 2008 and the debt from its acquisition is now 9 times its EBITDA or earnings before interest & tax. It’s wasn’t his smartest investment … Listen to what he says right at the end of this piece.

It’s a cyclic downturn

The convergent analysis of industry sources suggests that the media sector is roughly halfway through a two year cyclic downturn that became clearly evident in September ’08.

Accountability is king and the media sector is seeing advertising dollars move to interactive media where results can be proven.

Structural change is underway

I recall listening to Harold Mitchell predicting online spend will equal or better TV and newspapers by 2013 in Australia.  If anyone knows, it will be him.  Mitchell Communication Group is the largest buyer of media in Australia.

The adoption growth curve for online advertising in New Zealand lags behind the western markets of UK, USA and Australia, but the present impact of online cannot be discounted in our domestic market.

The disinflationary aspect of transferring print and television spend into online media will impact total adspend growth for some time. All this means that the surge of online advertising revenue in New Zealand will surpass radio and magazines over the next two years but total advertising spend across all media is likely to remain fairly constant, with the post-recession money moving off television and print onto interactive advertising.

“Spending will be down 7 per cent across 2009.  The drop was higher in the first half, so for the second half we’re predicting a decline of 5 per cent.  Ad spending in 2010 will be flat.”

Harold Mitchell, Mitchell Communication Group.
Source: Australian Financial Review 3rd August 2009.