tedstr

Media and Advertisers in Damage Control

A little bit too much chicken little here.

One needs to be careful not to group all these phenomena together. No doubt this will be a weak Q4. 2008 is already not where everyone wanted it, but then again, traditional media has been on that train for several years, even in a great economy and solid credit, on all platforms; TV, Newspaper, Magazines and Radio.

Your well written piece doesn't take into account the huge spreads in gross top line between all these businesses. A -10% decline for network TV is a loss of ~$2.0 Bil, a stunning number on top of at least the past two years of slow or declining business.

An internet increase of +9% would be + ~$1.5 Bil....slower than the ~+30% of recent years but still very very strong in any economy. Some PE compression due there but still nice businesses. Think Google at today's 2005 prices.

No doubt the loss of an auto brand (Chrysler?) will be devastating. Deflationary cycles have never been good for advertising and media as marketers put more money into price cutting and promotions and media loses its pricing power.

This time may be slightly worse, but declining commodity prices go straight to the bottom line of General MIlls and P&G and other Top 10 spenders and they will be looking to gain share from weaker competitors in any down turn and will spend ad $$ to get it.

Stay the course for the web and cable but watch out for newspapers and TV nets.

However Disney at a 10 PE is mind boggeling.