Although the advertising slump is forecast to continue through to the end of 2002, media analysts are confident that spending will return in 2003 and investors need not worry. “Advertising isn’t an investment priority. We assume it will come back, we assume it will be feeble in 2002 but will come back in 2003,” said Matthew Owen, an analyst with Morgan Stanley, speaking to the World Association of Newspapers annual Newspaper Advertising Conference.
“Over the last two years, we’ve gone through a phenomenon in terms of advertising that we will never see again in our lifetimes,” he said. “We saw an extraordinary bulge in advertising expenditures in 2000 which led to a sharp decline in 2001. The absolute level of advertising this year and in the first two quarters of 2003 won’t be so impressive.”
Of greater concern to newspaper investors, according to a recent Morgan Stanley study, are: