2001: The Year In Brief
” ‘How did you go bankrupt?’ Bill asked. ‘Two ways,’ Mike said. ‘Gradually and then suddenly.’ “ Ernest Hemingway, The Sun Also Rises, 1926.
January
In a move that seems now somewhat fanciful and outdated, Associated Newspapers launched its second attempt at a women’s web offering on 6 January. Initially meant as a relaunch of charlottestreet.com, femail.co.uk emerged with barely a trace of its forebear and was billed as a “2nd generation women’s web site”. Femail survived the year, many didn’t. Whilst Associated was taking the web by storm, Future Network Issues Second Profits Warning was already on its second profits warning, having already revised its expectations for year end results once in November 2000. ‘Softness’ in the computer games market and the absence of a seasonal uplift was blamed for the decline in profits.
Elsewhere the Radio Authority Announces Modernisation Of Advertising Rules announced a modernisation of its advertising rules, four websites owned by Express Websites To Close closed after the company failed to find a buyer for them and the Fears Of Recession Exaggerated, Says IPA said that fears of recession had been exaggerated whilst the Brokers Warn Of Tough Six Months, Downgrades Media Sector Shares downgraded media shares and warned of a tough six months ahead.
February
German media group Bertelsmann Acquires Controlling Stake In RTL acquired a controlling stake in European broadcaster RTL, Liberty Media May Be Interested In BSkyB Stake was said to be interested in buying Vivendi’s stake in BSkyB and Rupert Murdoch was thought to be close to agreeing a deal to buy DirecTV. These companies and their respective take-overs and mergers remained in the news all year as greater consolidation of the markets became the driving force within media companies in 2001.
WPP Sees Record Profits saw record profits in February as pre-tax profits for 2000 increased by 43% on the previous year. SMG Reports Record Pre-Tax Profits As SRH Stake Increases also reported record profits and Anglo-Dutch publishing group Reed Results Beat Expectations turned in better-than-expected yearly results. UBM Shares Surge On Strong Profits turned in an 11.4% rise in headline profit to £342.4 million for 2000 but the United Business Media Financial Results: Reaction were sceptical.
March
Carlton Says Subdued TV Ad Market Will Show Upturn In Q4 chairman Michael Green described the UK television advertising market as ‘currently subdued’ in comparison with last year at the company’s AGM, with ITV’s revenue in the first three months down 5%. The situation would improve though, he said, with an upturn in Q4. Pearson Embraces The Internet Where Others Falter posted pre-tax profits of £333 million for the year to 31 December 2000, 17% lower than the £402 million of last year following an investment of £196 million in the internet.
Cordiant Communications turned in strong financial results which showed record net new business wins worth £750 million in 2000. Aegis Confident For 2001 As Profits Rise 21% was also confident for 2001 as its profits rose by 21% in 2000. Trinity Mirror announced better than expected pre-tax profit growth of 12.2% to £196 million whilst Future Network ‘Pushed Off Course In Bruising Year’ continued to suffer following a ‘bruising year’ in 2000.
April
The outlook started to look a little less rosy in April. Zenith Downgrades Advertising Forecasts For Global Markets, the first of many, downgraded its global advertising forecasts predicting that in 2001, the ad market would decline for the first time since 1991. 40 Jobs To Be Cut At Online FT cut 40 jobs at its online division which includes FT.com, Q2 revenues at ITV Ad Revenue Shows Further Decline In Q2 were forecast to show a significant decline and Q1 results from WPP Q1 Results Disappoint Market And Brokers were disappointing.
AOL Time Warner And NTL In Talks, Says FT was rumoured to be in talks with AOL Time Warner regarding a distribution partnership and ‘Internet and ebusiness solutions company’ Bright Station Seeks Funds As Cash Runs Out began the descent into unprofitability which eventually led to a refinanced company rebranding as Smartlogik.
May
UBM Cuts Online Spend During Hi-Tech Advertising Slowdown cut its online investment for the current year from the planned £45 million to no more than £30 million blaming the ‘current market conditions’ for the investment cuts, notably the downturn in high-tech advertising in the US. Advertising Slows At Trinity Mirror Titles chairman, Sir Victor Blank, told the company’s AGM that advertising growth for the first three months of the year slowed although revenues were expected to remain in line with forecasts made in March.
Revenues at BSkyB To Cease Analogue Broadcast This Summer remained buoyant and the company announced that analogue signals would be switched off in the summer of 2001 despite still having around 150,000 customers who had not made the switch to digital, shares in BSkyB fell as the BSkyB Financial Results – Reaction found the results too negative. New media costs were blamed for pushing Chrysalis into the red as Carlton And Granada New Media Departments To Plan ITV Web Presence Boost decided to boost ITV’s web presence. Later in the month Carlton stock fell as the company warned on profits. GWR results were in line with expectations, Capital warned on profits and SRH was cautious as radio revenues dropped by 3.5%, against an industry average of 6.4% growth.
June
DMGT Results Flat, But Outlook Is Optimistic was optimistic about the future despite a slowdown at Associated Newspapers, the downturn hit jobs and profits at Economic Downturn Hits Cordiant Jobs And Profits and the slump at Continued Ad Revenue Woe At Granada, But Results Are Top End Of Predictions continued despite results hitting the top end of expectations. Granada warned of a ‘potential disaster’ for ITV unless the Government moved to amend media ownership regulations, UBM warned on profits and JCDecaux was forced to halve the price of its IPO.
AOL Confident That Adspend Slowdown Has Arrested CEO, Jerry Levin, announced that advertising revenues at the company had started to stabilise. Viacom CEO Says Ad Revenue Upturn Will Be Evident By Q4 chairman and CEO, Sumner Redstone, called his company an “advertising juggernaut” and said based on “empirical evidence” he expected the media economy to show signs of recovery in Q3/Q4 2001.
July
Petersen Sale Closes ‘Difficult And Unhappy Chapter’ In EMAP’s History confirmed the sale of its USA business to US consumer publisher, Primedia, for approximately $515 million closing a ‘difficult and unhappy chapter’ in the company’s history. UBC Turns In Good Figures As Digital Ventures Develop turned in a set of financial results ahead of the market’s expectations. Turnover rose by 46% to £6.2 million and gross profit reached £1.7 million, up 35% on the previous year.
Shares in Tempus Shares Soar On Havas Takeover Reports soared mid-month following reports that French advertising network, Havas Advertising was about to announce a takeover of Tempus for around £400 million (€658 million), thus beginning an epic saga that was to last well into November. Optimedia And Zenith Merged By Parent Companies were merged by their parent companies, Publicis and Cordiant respectively, creating the world’s fourth-largest media communications group, NewCo.
Optimedia And Zenith Merged By Parent Companies turned in a strong set of year-end results beating market expectations by some margin, operating profit increased by 88% to £160 million. Like for like revenues at GWR Assumes No Ad Recovery Until Q1 2002 dropped by 11% in the first quarter and the company said it was not assuming any significant recovery in the advertising market until Q1 2002. UBM To Axe 400 Jobs, Say Reports was forced to begin job cuts, Falling Ad Revenues At FT Could Feature In Pearson Results results were poor although Profits Down At Trinity, But Above Expectations faired better as regionals showed greater resistance to the ad downturn.
August
RIM Confident On Outlook And Independence reiterated that it was not interested in being split up by a consortium and that it intended to take its business public if no other suitable offers were received.
In keeping with an almost universal reappraisal of the role of the internet in media companies’ businesses, 46 Jobs Go As GWR Restructures Internet Operations restructured its online operations to make annual cost savings of around £1.3 million. Around 45 staff were lost in the restructure.
Profits Halve At UBM After US Hi-Tech Advertising Slump posted pre-tax profits down by 48% year on year for the six months to June, impacted by the downturn in hi-tech advertising revenues at its CMP Media publishing business in the US. Things were not to improve.
Speculation began to emerge that Sir Martin Sorrell, chief executive of WPP Poised To Make Counter Bid For Tempus, was poised to make a counter bid for the Tempus media buying agency just a month after reports that French group Havas Advertising was to take over the agency. This indeed came a few days later, when WPP confirmed a 555p per share offer for Tempus.
September
Havas Will Not Renew Tempus Offer extended its offer for Tempus a couple of times but declined to better WPP’s offer, eventually it allowed the offer to lapse leaving WPP Waits On Tempus Results Before Making A Move waiting on Tempus’s financial results before deciding on whether to continue with the takeover. Tempus Results Show Decent Performance In Tough Conditions, But Jobs Likely To Go announced better-than-expected results and it appeared that the WPP bid would proceed as planned.
On the morning of 11 September the Economy Rallies Following Worldwide Slump rose and the bargain hunters moved in following four days of freefall and a four-year low for the FTSE. A day later the picture was quite different, millions had been lost and stability seemed a long way off as the NYSE closed for four days in the wake of the tragedy. Ad Revenues Stabilising At DMGT, But Hit By US Attacks was one of the first companies to report that the terrorist attacks in US have had ‘an immediate impact’ on a number of its activities and was soon followed by Maiden Shows Strong Performance, But Hit By US Tragedy, Shares Slump As Cordiant Issues Profits Warning and already-troubled Future Shares Remain Suspended As Losses Are Revealed.
October
After months of negotiation, WPP Seeks Escape From Tempus Deal announced that it was seeking the consent of the Takeover Panel to invoke the material adverse change condition in order to exit from its offer for Tempus Group. Protracted negotiations ensued throughout the month.
Shares in ITV Stock Hit By Merrill Lynch Downgrades companies were hit hard late in the month as analysts at Merrill Lynch cut their forecasts for the Network’s advertising revenues. The broker pulled back 2001 growth from -14.5% to -15.5%; 2002 figures were revised from -2.0% to -2.5%.
Meanwhile, ITV Digital Reduces Costs And Grows Subs 36% In Q3 beat its internal subscriber growth targets for the third quarter. The business put on 82,000 customers in the quarter to September, pushing its total customer base to 1.2 million, up 36% year on year. Churn came in at 23.1%, much higher than Sky Digital’s rate of 10%.
Murdoch Walks Away From ‘Dream’ DirecTV Deal walked away from what many considered the ‘dream’ deal of his career – one which would have made him the greatest TV mogul ever, reaching more people in more countries than anyone else in history.
November
WPP Will Buy Tempus eventually announced that it would buy Tempus following the Takeover Panel’s decision to reject its appeal to withdraw its initial offer and subsequent wranglings.
Hi-Tech Advertising Deterioration Continues, Hammering CMP Media’s Profits, BSkyB Losses Fall As Subscriber Growth Continues, Wireless Group Offloads Wave 105 To Scottish Radio In Debt Clearance, Hollinger Sees Losses Increase As Advertising Revenue Falls, Emap Results ‘In Line With Expectations’ But No Second Half Recovery Expected, IPC Closes Exhibitions Business And Six Magazines, Costing 115 Jobs, News International Operating Profit Hit By Classifieds Downturn, Capital Radio Profits Fall 27% Following Ad Downturn, GWR Profits Drop 70% On Poor Advertising Market and ITV Digital Losses Weigh Heavy On Granada As Job Losses Continue all reported a drop in profits or cutbacks brought about by the severe ad downturn whilst a few companies managed to outperform the market; JC Decaux Announces Q3 Revenue Increase Of 11%, Scottish Radio Outperforms Market, But Profits Dip and Strong Radio Performance Aids Chrysalis Results amongst them.
In the latest consultation document on media ownership, culture secretary Cross Media Ownership Rules To Stay, Says Jowell inferred that the 20% rule which currently governs cross media ownership may remain and may yet be extended to cover all media markets. Driven by the belief that “the existing media ownership rules are outdated, inconsistent and not flexible enough to respond to the rapid change we have seen in media markets”, Jowell, in a joint statement with trade & industry secretary Patricia Hewitt, outlined the government’s proposals for media ownership reform.
December
Cordiant Makes Further Jobs Cuts As 2001 Revenue Predictions Fall Further cut more jobs as profit estimates were revised down again, the message from Carlton Losses Mount As More Jobs Go, DMGT Results Bring No Respite From Ad Gloom, RTL Statement Signals Further Decline In European Ad Market and Pearson Warns On Profits Seeing ‘No Material Recovery’ In Ad Market was similarly gloomy. Others painted a brighter picture, in a pre-close trading statement, Johnston Press Bucks Advertising Trend With Positive Growth For 2001 boasted profits in the ‘top range of market estimates’ and a growth in ad revenue of 1.6%, compared to to the same period 2000.
Independent News & Media said that, despite the prevalent gloomy trading conditions, it expected to deliver total 2001 revenues which are in line with 2000’s figures. Vivendi Offloads BSkyB Shares sold a third of its stake in BSkyB, leaving it with a 15% share in the satellite television company and, on Christmas Eve, Pearson Agrees Sale Of RTL Stake agreed to sell its stake in European broadcaster RTL to Bertelsmann.