INSIGHTanalysis: Media Healthcheck – May 2004

In the newspaper sector, things were looking up for Trinity Mirror who saw revenues rise by nearly 5% for the first four months of 2004 but at Times Newspapers the balance sheets didn’t look so healthy as it was reported the company is still in the red with losses expected to reach in excess of £28.6 million this year. However, Rupert Murdoch, head of parent company News Corporation, denied the loss saying that The Sunday Times ‘is very profitable’ while The Times ‘doesn’t make a fortune but it doesn’t lose money’.

In radio, Chrysalis announced that operating profit for the past six months had trebled to £3.7 million and Scottish Radio Holdings posted a strong performance for the first half of this year as revenue jumped by 10%. The improvements at Capital were slightly more modest, with revenues growing by 4% to £59 million.

Multi-media owner, Emap, also posted strong pre-tax profits, up 12% for the year but its share price took a knock as the group warned competition in the French TV listings market would impact the coming year’s profitability.

Global holding’s company Interpublic saw revenues rise for the fourth quarter running, up by 6% to $1.4 billion and despite Publicis also posting growth, up 4.4%, the group is still down 4.3% on the same period last year.

This month, WPP unveiled its third-string media network, Maxus Global in the Asia-Pacific region. The new company is intended to resolve several of WPP’s current conflict assignments and will be made up of second-tier agencies currently under the control of MindShare and Mediaedge:cia.

BSkyB announced along with third quarter results that subscriber growth didn’t meet expectations as it slowed to 66,000 net new subscribers over the period. While at Telewest, subscriber growth during quarter one was helping to reduce the group net loss to £36 million from £187 million on the same period last year.

Advertising Market – Looking Forward

The quarter one industry report was issued by Merrill Lynch. It revealed that the global research group expects the European advertising market to remain ‘less vibrant’ in 2004 but will have ‘greater pick up’ in 2005.

On the other hand, ML forecasts that US advertising expenditure will look worse in 2005, when compared to 2004. This is due to the tough comparisons being created by this year’s Presidential Elections and the Olympics.

Internet

The internet emerged as the top US advertising medium during May. A joint report from PricewaterhouseCoopers and the Interactive Advertising Bureau (IAB) showed that US online advertising spending hit $2.3 billion during the first quarter of 2004.

A study from the Online Publishers Association revealed that 18-34 year olds are the most frequent and active internet users. Although this age group only makes up 24% of total US population, it accounts for 38% of total time spent on-line, with 72% saying they regularly surf the web.

While young adults are described as being the heaviest internet users; a separate report from Jupiter Research is saying that on-line teenagers are ‘highly active online influencers’, with 22 million 13-17 year olds expected to be surfing the web by 2008. Girls make up 53% of influencers by spending time online shopping, chatting and spreading word about latest fashion trends and products.

The Technology, Media and Telecommunications (TMT) FTSE shares index grew by 3.6% during May 2004 as shown.