Sorrell: Old media will never be as profitable again

The profit margins within traditional media, including newspapers and television, will never be the same again, according to WPP’s chief executive Sir Martin Sorrell.

Speaking at an IAA event yesterday, Sorrell warned that the media industry continues to be “disintermediated” by low-cost business models.

“The painful thing for old media is it will never be the same again. It will never be as profitable as it has been,” he said.

Sorrell also predicts that “structural changes” in print, which include jobs losses, circulation declines and falls in print advertising across the sector, will continue.

He said that the problem with print started in the early nineties, when people in the “new-media” industry decided to give it away for free.

Sorrell thinks that while this was the right move from the consumers point of view, it changed the nature of the print business model.

He said: “It is impossible to take it back up. You can always start up here and take the pricing down, but you can’t start there and start moving it up.”

Earlier this month, Ad Age’s editor Jonah Bloom suggests a shift back to the paid model as a means of moving forward in today’s market (see Ad Age editor: “Respect the paid model”).

Bloom said: “I hope 2009 will be the year that media owners have the courage to realise that have to start charging.”

Sorrell said it is also a case of changing and innovating – “none of our clients will survive and prosper unless they continue to differentiate themselves in either tangible or intangible ways”.

WPP: 020 7408 2204 www.wpp.com