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Steve Birenberg, CFA
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Steve Birenberg is founder and President of Northlake Capital Management, LLC. Northlake specializes in managing portfolios for high net worth individuals using a unique strategy combining monthly ETF rotation based on major market themes supplemented by carefully selected media and telecom... More
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Northlake Capital Management, LLC
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Media Talk
  • Advertising Forecast Cut Behind the Curve 0 comments
    Apr 14, 2009 2:10 PM | about stocks: DISCA

    I have been following advertising forecasts closely for many years.  I have long thought that Zenith Optimedia provided some of the best forecasts and had the most insights into big picture trends.  However, Zenith has been way behind the curve on this downturn.  As a result, I find little value in their latest forecast cut which was outlined in Tuesday's Wall Street Journal.

    Zenith now sees US ad spending at -8.7% vs. a prior forecast of -6.2%.  The new global forecast is -6.9% vs. +0.2%.  The prior forecasts were made at the UBS Media Conference in December 2008.

    My thought reading this Journal article was "Zenith, tell me something I don't already know." I think that the lowered forecast contributed to lagging performance in ad-supported media stocks on Tuesday.  If that is correct it is an overreaction and media stocks could rebound if the market turns up soon.

    Beyond the daily movements, I think the recent big rally in media stocks assumes a stabilizing ad envrionment with improvement late this year.  I think that might be a bit optimisitic and would be careful putting new money in the group at current prices.  In fact,. I trimmed my position in Discovery Communications (NASDAQ:DISCA) last week even though  DISCA has among the strngest advertising growth profiles for 2009.

    Themes: media, advertising Stocks: DISCA
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