MediaFile

Pity paper and ink. Over the next five years magazine and newspapers’ advertising and consumer spending (read: subscriptions)  growth rate is expected to decline, according to PricewaterhouseCoopers. The firm released its annual Media and Entertainment Outlook for 2010-2014 and that is one of the more striking, if not predictable, data points in the forecast.

In fact, magazines and newspapers fork in the opposite direction of other traditional media like radio.  PWC predicts that television,and radio, along with the Internet, video games and out-of-home are all expected to pocket advertising and subscriber dollars  with  growth rates increasing over the 2010-2014 period.

Another category  that has taken a beating but is expected to rebound? Books! PwC estimates the consumer and educational book publishing industry will advance 2.5% in the five year period to $35 billion.

The growth in book category should offer some cheer to newspapers and magazines executives. For the consumer book segment, electronic editions are anticipated to jump more than 23% to $1.3 billion. Granted that growth spurt comes off a small base of dollars to begin with, but still.

“People who download on proprietary devices” — like the Kindle — “read a lot more books — in orders of magnitude,” said Tim Corrigan, a partner in PwC’s  entertainment and media practice. “It changes the model significantly. Your hard core readers in many cases prefer the convenience of an e-book.”

I didn’t get a chance to look at these numbers on Internet advertising that PricewaterhouseCoopers and the Interactive Advertising Bureau released on Monday, thanks to being on a late shift and having plenty of news to shovel through thanks to Conde Nast. I glanced at them on Tuesday, however, and here’s what I seized on in the press release:

U.S. Internet advertising revenue in the first half of the year was $10.9 billion, down 5.3 percent from last year’s first half. Search and display-related advertising continue to represent the largest percentages of overall interactive advertising spend. Search revenues amounted to more than $5.1 billion for the first six months of 2009, up slightly from that same period in 2008. Display-related advertising—which includes display ads, rich media, digital video and sponsorship—totaled nearly $3.8 billion in the first six months of 2009, showing a relatively modest 1.1 percent decline from the same period in 2008. Digital video continues to experience robust growth with a 38 percent increase from the first half of 2008. And this quote: “While the overall advertising market has continued to be impacted by current economic conditions, marketers are allocating more of their dollars to digital media for its accountability and because consumers are spending more of their leisure time online,” said David Silverman, PwC Assurance partner.

The video section is what caught my attention. I’m one of those people who is perpetually fascinated by the faith that people put in Internet video. Newspaper websites want to do more of it, and everyone else seems to be interested too. The idea, they say, is that video is an ever-more popular way to give people news, ads and what-have-you in a format that modern audiences want.

Maybe I’m antediluvian because I’m 36 years old, but it seems to me that pursuing video just so you can say you’re modern doesn’t seem like it’s going to meet the tastes of most of the Internet audience. Video can be distracting and time-consuming. Yet, more ad dollars are going to it. How popular is video online really? I mean, when it comes to news and ads. Am I completely wrong about this, or is video going to remain a small part of the ad revenue pie?

Deal-making in the U.S. media and entertainment sectors is going to be down this year, says a new PricewaterhouseCoopers survey (request a copy here). Now, that’s not a new or startling conclusion given the state of the economy, but it’s just another piece of evidence that when consumers and advertisers get thrifty, deal makers can end up become benchwarmers as companies struggle with cost cuts and other exigencies.

Here are some industry trends for 2009 from the PWC survey:

Declining consumer spending is hitting many media and entertainment companies. What’s more, these declines were exacerbated by technological convergence, as these firms adapt to and look for ways to make money off new Internet technologies. Overall U.S. advertising market is going to shrink as sponsors cut ad budgets across retail, consumer goods, automotive, financial and other sectors. Companies will continue to divest their non-core assets, but those that don’t get a good price will prefer to hold on rather than sell at bargain prices. Bolt-on deals will likely be popular for risk-averse companies, so deals below $1 billion — mostly small and mid-market companies — will be a rising trend. Private equity will remain quiet since the debt markets aren’t really healthy yet. Deal structures will change this year, given the difficulty of getting debt financing. The strategic rationale for doing a deal will be more important than getting a favorable capital structure.

But all hope is not lost, according to PWC’s Transaction Services Entertainment & Media Leader Thomas Rooney:

With M&A activity ingrained in the DNA of so many companies and the ever growing presence of private equity, E&M deal activity might not be as quiet as many expect in 2009… History has shown the E&M industry to be one of the more active M&A sectors irrespective of market and economic conditions.