INSIGHTanalysis: Media Healthcheck – May 2003
Things are certainly starting to firm up in the US, particular after the whopping upfront season, which has just closed around 15% higher than last year’s commitments. The upfront spend has exceeded pretty much everyone’s expectations and this will have a positive effect on the confidence of the industry.
Nielsen Media Research reports that overall US adspend grew by 1.5% in the first quarter of the year, although the full-year is expected to be stronger than this.
UK trading In the UK, recent media company trading statements have been far from consistent and visibility appears to be variable. The year got off to a broadly good start, but the war with Iraq and a wobbly economy look set to dampen growth figures moving into the second quarter.
The major radio groups’ first half and full-year results show the smaller operators outperforming the larger ones in terms of airtime revenue growth. Most are talking of a fairly encouraging start to the year, although Capital Radio is still in the doldrums. Nevertheless, the UK radio industry enjoyed record adspend in Q1, up by 2.3% on last year to £139 million.
National newspapers revenues at the Daily Mail & General Trust were still weak in April, with May a little better. It does not expect any recovery to pre-war spending levels within the group’s financial year.
Trading in the television market has deteriorated, with poor monthly performances looking set to be a feature of the year for ITV, according to analysts at Merrill Lynch. The broker has downgraded its airtime revenue forecasts for ITV1 to -2.5% in the year September, from the previous -1.8%.
Strong advertising at ITV is not really anticipated until 2004, when an economic recovery, better advertising share and the expected merger of Granada and Carlton should all help the Network’s revenues.
The UK business press is thought to have seen the worst of its downturn, with observers forecasting that trading conditions are now on the road to improvement. The PPA‘s B2B Strategic Conference was told that there will be steady growth in the sector over the next twelve months.
EMAP says that consumer magazine trading is healthy and showing good growth. Nevertheless, despite a ‘reasonably’ good start to the year, it remains cautious about any material improvement in the media markets generally. International magazine publisher, Future Network, saw an ‘encouraging’ start in Q1.
Outdoor advertising is outperforming, with industry revenues up by 16.9% in the first quarter. However, Q2 is likely to show a curtailment of this growth as the effect of the war and economic uncertainty come into play.
Forecasts Both Jack Myers and Merrill Lynch slightly reduced their 2003 US advertising forecasts in May. Myers clipped growth back from 3.3% to 3.1% for the year, whilst Merrill came down from 3.7% to 3.3%. Globally, Merrill is now forecasting growth of 2.0%, down from the previous estimate of 2.7%.
The broker says that the downgrades are small given the ‘gyrations’ of the year so far and should be seen as a good thing.
The UK’s Technology, Media and Telecommunications (TMT) FTSE shares index increased by 20% during May as shown.
