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)

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:

• McGraw-Hill’s broadcast revenue in the first quarter fell almost 23 percent reflecting softness in both local and national advertising. (Broadcasting & Cable)
• The U.S. Supreme Court upheld a government crackdown on profanity on television. (Reuters)
• Activision may pick Van Halen for its next Guitar Hero game (PaidContent)

(Photo: WPP Chief Executive Officer Sir Martin Sorrell, Reuters)

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:

• ABC is hoping the financial crisis makes for some good laughs, as it readies two Wall Street comedy pilots ( AdAge.com)
• The Seattle Post-Intelligencer newspaper is pressing ahead with plans to turn into an online-only publication (WSJ.com)
• CNBC takes it on the chin — yet again (Gawker)

(Reuters photo of CEO Martin Sorrell)

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.”

Next up: Walt Disney Co this afternoon.

Keep an eye on:

• Media companies that lapped up millions of political advertising dollars in 2008 will feel the loss of that money next year (Reuters)
• What Yahoo needs is a new CEO –  someone to make everyone believe that a true leader is at the helm, ready to fight (TechCrunch)
• Johnson & Johnson has consolidated U.S. creative duties on more than 35 prescription drug brands at WPP Group and Interpublic Group (AdWeek)
• Barack Obama’s win on Tuesday captured the attention of more than 71 million television viewers, a record audience for a presidential election (LA Times)

(Photo: Reuters)

 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: 

• Advertising group WPP declared its offer for bid target Taylor Nelson Sofres final and will not increase it (Reuters)
• Playboy magazine is launching a search for models to pose for its upcoming feature, “Women of Wall Street” (Reuters)
• News and information publisher Thomson Reuters reaffirmed its full-year outlook although it said the financial crisis hitting many customer banks would hurt the company in the short term (Reuters)

(Photo: Reuters)

What will be the size of the U.S. television audience for the vice-presidential debate?

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:

While the loss of the AT&T contract should have a positive impact on 2009 free cash flow for DISH (due to subscriber acquisition costs), DISH will be somewhat strapped to do any investing in its own business for the next several months. DISH has $1 billion in debt maturities coming due Oct 1 and has no revolver in place. While DISH can pay down this debt (and $500 million for the AT&T convert) through cash and investments - $1.8 billion at 6/30/08 - DISH will have limited capital to invest in its mobile video initiative or build out its direct sales channel.

But one analyst sees an investment opportunity despite DISH’s troubles.

Todd Mitchell, Kaufman Bros

The net impact of this deal will be to negatively impact DISH’s gross adds while putting greater pressure on churn. However, given DISH’s rather dismal operating performance recently we have already handicapped it pretty heavily. DISH’s performance should improve regardless of AT&T.

(Photo: Reuters)

Keep an eye on:

• WPP, the world’s second largest advertising group, has extended its 1.2 billion-pound    ($2.2 billion) offer for market-research company TNS again, TNS said it continued to recommend shareholders reject the bid (Reuters)
• Goldman Sachs cuts European media companies to reflect greater debt concerns and worsening macro economic outlook, especially in the UK and Spain. (Reuters)
• U.S. newspaper publisher McClatchy Co said it amended a credit agreement with its lenders helping it to avoid defaulting on its debt. (Reuters)

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.

TechCrunch:

While TheWB fares well in terms of features when compared to its competitors, its content still falls well behind the multi-network selection offered by Hulu. That said, it’s always nice to see more (legal) free television on the web, and the advanced search alone could help set TheWB apart from the sites offered by each individual network.

Keep an eye on: 

• Taylor Nelson Sofres continues to recommend rejecting a hostile takeover bid from WPP despite preferred suitor GfK giving up its takeover attempt (Reuters)
• Rising development costs may drive Microsoft Corp, Sony Corp and others to publish more video games themselves (Reuters)
• TiVo reached a deal with Entertainment Weekly that will allow its users automatically record TV shows suggested by the magazine (WSJ.com)

(Reuters photo of “Buffy” co-stars Sarah Michelle Gellar Michelle Trachtenberg at the 2001 Teen Choice Awards)

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)

(Photo: Reuters / WPP’s Martin Sorrell)

 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.”

The results so far are likely a big relief for NBC, which, as MarketWatch points out, is hoping for a spillover effect from the Olympics:

The Beijing Games will have far-reaching benefits, NBC fervently hopes. The network believes that the widely watched and discussed Games will serve as the ideal lead-in for NBC’s fall prime-time line-up. In addition, Walt Disney’s ABC morning and evening news programs have been nipping at the heels of NBC’s pace-setting “Today” and “Nightly News” shows.

Keep an eye on: 

• WPP says that German market researcher GfK was misleading the market about its intentions to acquire British rival Taylor Nelson Sofres (Reuters)
• Internet conglomerate IAC/InterActiveCorp is moving ahead with plans for splitting up the company, saying spin-offs of its divisions would occur on August 21 (Reuters)
• A major shareholder says cable television operator Cablevision Systems Corp should sell one of its units to raise cash for an aggressive stock buyback rather than break up the whole business (Reuters)

(Photo: Reuters)

Here we go…

Two days before the iPhone’s launch, fans around Asia are queuing up to buy Apple’s latest offering. They don’t seem to care that it’s raining or freezing cold or if lining up early means missing work or school.

The July 11 launch will be the first chance, after all,  for Asian consumers to own an iPhone.

“I’ve told my professor I was going to go buy an iPhone, and he gave me permission,” said Hiroyuki Sano, a 24-year-old graduate student who early on Tuesday arrived in rainy Tokyo from Nagoya to be first in line. Sano, speaking to Reuters, and incidentally wearing a T-shirt with an Apple logo, described his professor as an equally big Apple fan. “He sent me off cheerfully.”

The United States has already been through this, when the iPhone first went on sale a year ago. As the New York Times recalls, “TV news coverage was relentless. Hard-core fans camped out to be the first in line. Bloggers referred to Apple’s new product as the ‘Jesus phone’.”

The paper adds, “This time, though, when the iPhone 3G goes on sale in AT&T and Apple stores, iPhone Mania will be considerably more muted. That’s partly because the mystery is gone, partly because the AT&T service costs more and partly because there aren’t many new features in what Apple is calling the iPhone 3G. ”

But let’s be clear: There’s still a boatload of interest in this phone and plenty of people will be talking about it this week, offering their two cents on what they like and dislike about the iPhone.

One big name, the Wall Street Journal’s Walt Mossberg, is already weighing in, with a mixed review, knocking the battery life but applauding the phone’s introduction of third party software. 

“I’ve been testing the iPhone 3G for a couple of weeks, and have found that it mostly keeps its promises. In particular, I found that doing email and surfing the Internet typically was between three and five times as fast using AT&T’s 3G network as it was with the older AT&T network to which the first iPhone was limited.”

“Bottom line: If you’ve been waiting to buy an iPhone until it dropped in price, or ran on faster cell networks, you might want to take the plunge, if you can live with the higher service costs and the weaker battery life. The same goes for those with existing iPhones who love the device but crave faster cellular data speeds. But if you already own an iPhone, and can usually use Wi-Fi for data, you probably should hold off and get the free software upgrade before deciding whether it’s worth getting the new hardware.”

But is it worth a two-day wait in line, in the rain, wearing a silly T-shirt?

Keep an eye on: 

• Carl Icahn would have more support in his proxy battle against Yahoo if he pledged not to sell the company for less than $33 a share, said Legg Mason portfolio manager Bill Miller (Reuters) 
• WPP Group, the world’s second-largest advertising company, made a hostile 1.08 billion pound ($2.13 billion) bid for Britain’s Taylor Nelson Sofres, challenging its agreed merger with GfK Holdings AG (Reuters)
• A blind trust run by New York City Mayor Michael Bloomberg is willing to pay between $4.5 billion and $5 billion to buy Merrill Lynch & Co’s 20 percent stake in financial news and data provider Bloomberg LP (NY Post)
• The smaller of Hollywood’s two performers unions ratified a new prime-time TV contract on Tuesday, undermining a last-ditch bid by the larger, more militant Screen Actors Guild to secure a richer deal (Reuters)
• NBC Universal Chief Executive Jeff Zucker is looking to spin off or sell some of the company’s assets when he attends a media conference (NY Post)

(Photo: Reuters)

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