Good Prospects For Media Industry

It is predicted that the media industry has good prospects for organic growth which will significantly outstrip GDP, according to a report by stockbroker Panmure Gordon.

In its 1996 review, the company’s analysts believe that a buoyant economy will provide a healthy backdrop for those companies with an exposure to advertising. It also predicts that cross media ownership and regional consolidation will increase, with regional or divisional hubs emerging which will “raise barriers to entry and reinforce dominant market positions.”

Panmure also sees the world of electronic and digital media holding “limitless potential for those with the ability and resources to exploit it.”

More specifically, it is predicted that 1997 will be a “vintage year” for advertising, with the late cycle classified ad rebound set to continue. In terms of national newspapers Panmure believes that circulations are stabilising with the battleground moving from price to editorial; the price of newsprint is also set to continue the 20% drop seen so far this year. In the television market, the launch of C5 and Digital television (both satellite and terrestrial) will continue to fragment audiences and the competetive position of BSkyB will be threatened. Radio will continue as the fastest growing advertising medium.

As far as media stocks go, Panmure believe that United News and Media is worth backing, mainly due to its new management team, as is WPP Group, due to the consolidation of its global accounts and the elimination of average net debt by the end of 1998. Other “buy” recommendations are EMI, Reed Elsevier and Reuters.

Panmure Gordon: 0171 638 4010