Live blog from the Reuters Global Media Summit
Reuters reporters will be sending live updates from interviews with guests including Disney’s Anne Sweeney, IAC’s Barry Diller, WPP’s Martin Sorrell, Sirius XM’s Mel Karmazin and more.
2010 ad spending outlook brightens, no thanks to the U.S.
If you think the advertising market is bad in the United States right now, just wait until next year.
In a new report, GroupM, the media arm of ad holding company WPP, predicts that advertising expenditures in the United States will drop by 4.3 percent this year, then drop by 6.5 percent in 2010.
“We expect a bottoming out on local media spend in 2009 with more stability into 2010. However, we are expecting further contraction on national media, particularly television, as clients adjust budgets to reflect a continued pessimistic consumer spending forecast.” GroupM Chief Investment Officer Rino Scanzoni in New York said in a statement.
But wait! The report isn’t all bad news. GroupM figures that worldwide spending will drop 5.5 percent this year, but only 1.4 percent in 2010, largely thanks to the BRIC nations of Brazil, Russia, India, and China.
“China’s economic stimulus has already bolstered confidence, and the demand for advertising in Russia will recover quickly if $70-a-barrel oil prices are here to stay,” said GroupM Futures Director Adam Smith. “Brazil and Indonesia remain among the top growth contributors, and India is predicted to come back strongly after pausing in 2009.”
He added, “Our global forecast for 2009 has finally stopped tumbling. The 15 countries still reporting positive ad growth in 2009 has become 33 in 2010, and the number could rise as we phase through the year.”
(Photo: Reuters)
This is something we have to get used to, its not the old world economies anymore but the Bric countries that will become the new leaders of the pac.
Advertising slump shows no signs of relenting
The news media may be preoccupied with Swine Flu and the Banking Crisis and the Auto Industry meltdown, but look beyond those hot topics and you will see a familiar story — you know, the advertising-business-is-getting-slammed story.
Advertising group WPP today said it would not meet its 2009 forecasts after quarterly sales fell 5.8 percent, as companies slashed marketing budgets. This comes after rival Omnicom on Monday reported that its first-quarter revenue fell 14 percent.
Interpublic needed a heap of cost-cutting moves — including job cuts — to help it post a loss that was smaller that Wall Street expected. Revenue fell nearly 11 percent — maybe that’s a case of it-could-have-been-worse for a company that counts General Motors as one of its single largest clients.
Perhaps a recent run-up in the shares of media stocks portends better days for advertisers, right?
Not really. Experts warn that advertising spending is not yet showing any indication of bouncing back. Omnicom’s CEO John Wren says even those who are “at all optimistic” are looking toward the back end of this year and the beginning of 2010 for any kind of recovery.
And certainly the Swine Flu, the Banking Crisis and the Auto industry’s woes aren’t likely to help.
Keep an eye on:
Good news for Madison Ave: WPP will only be slightly down
Slightly down is the new up.
At least judging from the reception that advertising giant WPP received today after it predicted like-for-like revenue would drop 2 percent this year.
Shares were up about 5 percent after the report from WPP, the last of the big three advertising holdings to post quarterly results. For all the worry about the advertising recession — and no doubt advertising is bad right now — WPP, Omnicom and Interpublic also showed some bright spots in their numbers.
WPP, in fact, said the in the ”long-term” the outlook for the advertising and marketing services business “appears favorable.” “Long-term” isn’t a particularly well-defined timeframe, but nonetheless those are pretty upbeat comments coming from an industry that has seen auto, retail and financial services spending drop like a stone.
“The fact they’re saying revenues in 2009 will be down 2% is relatively reassuring given the current climate,” RBS analyst Justin Diddams told the Wall Street Journal.
Keep an eye on:
How bad is local advertising? Ask Fox
We’re guessing Rupert Murdoch isn’t smiling quite so much right now. Not after News Corp reported a larger-than-expected drop in quarterly profit and cut its full year outlook.
The problem? In case you haven’t heard, advertising, particularly at the local level, is in terrible shape. Any company with local TV stations — and News Corp is one of them — is hurting right now.
Indeed, Fox Television Stations’ first-quarter operating income fell 48 percent from the same period last year. Overall, News Corp profit fell 30 percent.
What seems to be surprising media-watchers and analysts is the extent of the advertising pullback. Now everyone seems to be rushing to ratchet down their estimates well into 2009.
“There’s probably still going to be negative sentiments on the sector since people are starting to realize…that we’re probably not going to be getting out of a recession for another three quarters or so,” said Miller Tabak analyst David Joyce.
“Going forward, the debate will now shift to whether this new more dour outlook represents just the type of earnings reduction investors will need to get interested in the stock,” said Citigroup’s Jason Bazinet. “Or, alternatively, it could suggest we’re still in the early innings of a protracted downturn that could extend beyond fiscal 2009.”
We are seeing that local advertising needs to bridge broadcast, broadband and social networks to better reach the intended audience. These economic times always create a shift in how we reach our customers. We must be nimble in finding where we might build the confidence of the consumer. dave@mediamobz.com
The (TV ratings) race for the White House
As far as TV ratings go, last week’s presidential debate was a loser, drawing the one of the smaller audiences in modern history. It should be a different story for tonight’s vice-presidential debate.
For one thing, the presidential debate between John McCain and Barack Obama, which drew just 52 million people, took place on a Friday night, never a great night for TV viewing. By contrast, the match-up between Sarah Palin and Joe Biden comes on a Thursday night, usually a big TV viewing night.
Besides, even though Katie Couric’s interviews with Palin only had a modest impact on CBS News ratings, as the New York Times points out, there is nonetheless a great deal of interest in the Republican vice presidential candidate.
“This is going to be a hugely rated debate,” said Chuck Todd, political director of NBC News, told the Hollywood Reporter. ”Whether you’re a fan of hers or you’re not a fan, it’s a white-knuckle affair.”
The Associated Press tells us: “The most-watched vice presidential debate ever was in 1984, when 56.7 million people watched Vice President Bush take on Geraldine Ferraro, the first woman on a major party ticket.”
We’ll soon see how tonight’s numbers stack up.
Keep an eye on:
Staged “debate” dance now ready for 24/7 consumption.
Bailout Barack Obama w/partner Bailout John McCain.
Full-spectrum media suppression/distortion
target Ralph Nader and Ron Paul.
Your vote is your power,
they fear it, use it.
An unclear future for DISH?
Wall Street sell-side analysts seemed to be unsurprised by AT&T’s decision to pick DirecTV as its video marketing partner for its version of the ‘triple play’ package, in regions where it hasn’t built out its U-verse digital service.
The final decision had seemed obvious to analysts after DISH said earlier this month that AT&T would extend its five-year relationship by just one month to Jan 31.
But what does it mean for the independent DISH and its maverick founder/CEO Charlie Ergen (pictured), with the No. 2 U.S. satellite TV provider already struggling with customer losses in a tough economy?
Here’s what a few analysts say:
Craig Moffett, Sanford Bernstein.
The announcement is a clear negative for Dish Network, and a major win for DirecTV. As a result, we now expect Dish Network to post a sizable (400,000) subscriber loss for full year 2009. We had previously expected approximately flat net growth. For DirecTV, we now expect a gain of 800Kwhere previously we had expected approximately half that.
Ingrid Chung, Goldman Sachs:
For your video viewing pleasure…
Good news for fans of guilty pleasure shows like “Buffy the Vampire Slayer”, “Felicity” or “Dawson’s Creek” - TheWB.com is about to be up and running. With those shows and others, the website hopes to bring in those 18-34 year-olds so loved by advertisers.
Thing is, the website exists even though the television network doesn’t. Recall the WB was folded into UPN a couple of years ago to create the CW. (Warner Brothers, however, is still one of the major TV studios).
Given that, it’s sort of strange that Craig Erwich, EVP of Warner Horizon Television which oversees TheWB.com, tells Silicon Alley Insider in an interview that the thing separating TheWB.com, from other websites it – well, the name.
“The WB is a brand that resonates with fans and we are capitalizing on the history of the brand have created a destination site that targets a niche audience and that gives fans an active experience,” he says.
(Otherwise, Erwich gives very little away in the interview, declining to discuss specific details and numbers)
The site is supposed to launch later today, and it will be interesting to see how it stacks up against Hulu.com, which most people considered a big leap forward for professionally produced online video sites. Already, TheWB.com has some good reviews from those who got an early look.
‘Overpayers’ social network
Are Microsoft and WPP gearing for an asset swap?
Advertising Age’s Abbey Klaassen is reporting that the two companies — criticized for overpaying for their respective digital advertising acquisitions — have rekindled six-month-old discussions to scratch each others itch.
Microsoft may possibly be seeking to shed its Avenue A/Razorfish, one of the units of aQuantive it purchased last year in a $5.9 billion deal. Avenue A accounted for about 60 percent of aQuantive’s revenue. But getting anywhere close to $3.5 billion would be far-fetched. The division’s market value is close to $800 million, Klaassen calculates.
Enter WPP’ s Martin Sorrell, who has also sought to unload Open AdStream, the ad-serving division of 24/7 Read Media, which WPP purchased for $649 million.
The hitch: Sorrell sees m&a activity in emerging markets like China, not the United States.
Keep an eye on:
- Merrill Lynch may seek to revise its contract with MGM to see if the studio violated any terms by “axing” Paula Wagner as UA’s CEO (NY Post)
- Beijing Olympics were a big ratings success for NBC, but profit estimates of as much as $100 million are too high. (FT)
- Consumer electronics companies want your TV to talk to your fridge. (NYTimes)
So far I don’t see or hear anything from the current President or the Senators seeking his office which will be of any immediate help to homeowners in foreclosure. The current Bailout plan on the table does not appear to contain what is best for the average American homeowner.
However, if the homeowner and the economy are to benefit in an immediate fashion there must be an infusion of cash flow. Why not do something that would accomplish this regardless to the present plan being hashed out in Washington? Before the President leaves office he should call for or sign by executive order a stay of all proceedings in regards to all Americans presently in foreclosure. Americans who are presently in foreclosure should begin to pay their regular payments, portions thereof or at least the interest on the loan while the stay of proceedings is in place. This action would at least create a cash flow in the industry for the mortgage companies affording them to pay their obligations or whatever they deem necessary.
This stay of proceedings would also allow time for a more well thought out plan with the supposed 700 billion dollar bailout funding as to how it will assist the average American homeowner and the economy. In the mean time no other American homeowner will suffer the loss of their home. Is this not the goal and one of the focal points of the bailout?
If the President does nothing until the bailout plan is finally prepared and accepted many more home owners will have lost their homes before receiving any benefit from these monies. By the time monies are available, that is if the average American home owner is benefited at all, it will be too little too late. This action will show the American people that President Bush can in fact do what is best for the average American before he leaves office. President Bush can leave office with a more positive impression in the minds of the American people.
NBC winning big in the games
NBC is putting up big numbers so far in the Olympics.
Start with the opening ceremony. While some complained that the event couldn’t be seen live in the United States, the move to delay the broadcast and run it during prime-time paid dividends. Some 34 million viewers tuned in, up about 35 percent since the last summer games.
Indeed, helped by the splashy opening ceremony and the star power of swimmer Michael Phelps, NBC is setting the stage for what could be record Olympic viewership in America. Over the first two days of its coverage, NBC has attracted a record 114 million total viewers – 4 million more than Atlanta in 1996 and nearly 20 million more than Athens in 2004.
Those numbers suggest that Web coverage hasn’t taken away from NBC’s TV audience.
As the Wall Street Journal writes:
In the first two days of the games, 90% of viewers watched the Games on TV alone, with nearly 10% watching on TV and online, according to Alan Wurtzel, NBC’s president of research. Only 0.2% watched on the Internet alone, Mr. Wurtzel said.
“The streaming will not diminish the ratings,” said Neal Pilson, a sports-media consultant who advised the International Olympic Committee in negotiations for broadcast rights. “It encourages viewers and provides them with information. There will be no dilution or fragmentation of the national audience.”
