S&P Sees Another Tough Year for Most Media Companies
2007 was a difficult year for US media companies. Overall advertising revenue did not grow during the year, and the film and television sectors were crippled by the writers’ strike. In a new report, Standard & Poor’s sees only a minor improvement in 2008 thanks to the US elections and the Olympics.
S&P forecasts a 1.7% rise in advertising revenues for the current year, including search engine advertising.
“The radio, newspaper, magazine, and TV segments continue to gradually lose share of total ad spending, propelling asset portfolio restructuring by media firms,” S&P says. “The majority of those that underwent LBOs over the past three years are laboring under onerous debt burdens that were based on expectations of continuous liquidity availability.”
We expect that this will result in another year of media and entertainment downgrades outnumbering upgrades.
Traditional media sectors continue to lose their market share to online advertisements. Print media companies in particular are facing critical questions as to their long term viability. They are not alone in their circumstances, however. Concern over a major Screen Actor’s Guild strike combines with the overall health of the economy to make for a generally negative prognosis for growth of traditional media.
Other key issues addressed in the report:
- Will Political Advertising Save TV Station Groups From Declining Revenues In 2008?
- Radio Station Groups: National Advertising Feels Economic Pressure
- Internet Advertising Continues Its Growth Streak
- Magazines Are Still Trying To Turn The Page On High Credit Risk
- Newspaper Declines Affect Both Investment-Grade And High-Yield Credits
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