Insight May Round Up

BSkyB kicked off with strong results – revenues grew by 27% to £1.7 billion and earnings were up 64% at £140 million – and a dramatic statement that its analogue broadcast is to be switched off this summer. Shares in Sky dropped dramatically after the results were published despite buoyant ad revenues, up 16% year on year against Advertising Association (AA) predictions of 2.0% growth in 2001 for TV.

Meanwhile New York economist Jack Myers was even more pessimistic, revising his ad revenue forecasts yet again. In April, Myers predicted that ad spend would rise by only 2.4%, a revision of his 4.9% prediction in December 2000. Fearing that the decline in the US economy “is much deeper and of longer duration than we anticipated”, Myers adjusted his forecasts accordingly, predicting a 1.5% decline in ad spending for the year. In case anyone had a shred of optimism left, he added “We are in a genuine advertising recession, and we can expect some radical belt-tightening and shifting of business plans and strategies.”

This was not the consensus over at Maiden whose AGM statement, whilst admitting that the US slowdown has had an impact on growth, claimed that despite a ‘more uncertain economic environment’ in May and June, it expects to show a 9-10% increase in revenue over the same period last year. Analysts at ABN Amro expect outdoor to be the fastest growing medium in the UK this year and put growth estimates at 5.5%.

Results from GWR also damaged the credibility of the doom and gloom camp. Revenues at Classic FM, the company’s flagship station were reported to be up by 22%, and chairman Henry Meakin commented “We have started the new financial year in difficult advertising market conditionsÂÂ…. The radio industry is forecast to grow faster than any other traditional medium and the Group has a strong portfolio of assets which represent real growth potential. With our new technology platforms providing greater efficiencies and with the prospects of a more liberal ownership regime, we remain confident of the future for GWR” Latest AA forecasts puts growth in radio revenue at 9.5% for 2001.

Television appears to have been hit hardest by the much-talked about ‘period of economic uncertainty’. Carlton’s stock price tumbled when its results showed a fall in like for like revenues of 6% although it is important to consider that last year TV revenue was riding high on the dotcom wave. ABN Amro believe that at a result of this, CPTs rose to an unrealistic high relative to other commercial channels causing ITV to lose its advertiser share and leading to difficult comparisons, year on year. Carlton responded to the situation by announcing plans to bring their digital terrestrial TV service, ONdigital, into the ITV fold, creating a free-to-air, pay television and online business under a single management. This, says Carlton, marks an important shift in British broadcasting.

Online, the future looks bright. This month Jupiter MMXI expressed its confidence that the internet can make money providing the right consumers are targeted with the right opportunities and IDC and eMarketers were similarly optimistic – all drawing on the undeniable increase in those using the net both at home and in business. IDC forecasts that by 2005 almost 1 billion people around the globe will be using the internet driving e-commerce revenue to $5 trillion a year.