Speaking as part of a panel session at the Ofcom Annual Lecture yesterday (Trends in TV, Radio and Telecoms), Sarah Simon, executive director of Morgan Stanley, accepted that the media industry would continue to grow. However, it will be a “bigger market spread across more companies; so lower margins and multiples of earnings will be lower”…and “more capital will be needed to sustain growth.”
“The incumbent companies are going to face more competition and lose market share, but may be able to move into new markets (such as BT and video). The city will no longer value these companies on the old business plus huge new potential, she added: “one plus one equals three no longer; maybe one and a half now,” as the core business loses that share.
She highlighted three other current topics:
The importance of triple play (the cable companies at last being able to offer integrated TV, phone and internet packages now that broadband is taking root).
The importance of Rupert Murdoch’s $580m deal for Intermix Media this week – an ex-sceptic converted to the business power of the internet now.
The de-rating of free to air TV companies last year (because of the expected threat of PVRs), but the minor revival this year to-date.
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