Industry Spotlight
Rolling back ad spending
Businesses are expected to cut back on advertising at a much greater rate in 2009, darkening the outlook for media companies.
Credit Suisse analyst Spencer Wang estimates that advertisers will spend 8 percent less this year, compared with a 3 percent decline in 2008. That led him to lower profit estimates on a swath of media firms including News Corp. (NWS), Viacom (VIA), Walt Disney (DIS), Yahoo (YHOO) and Time Warner (TWX).
Three of the industries hardest hit by the recession — autos, financial services and retail — accounted for a third of total U. S. ad spending, according to advertising- industry estimates. Wang expects ad sales on cable TV and the Internet to hold up better, as their users continue to grow. Radio and print, meanwhile, are projected to suffer the worst declines.
Standard & Poor’s analyst Tuna Amobi is bearish on big media firms, saying the group is “increasingly vulnerable” to consumer weakness. He rates Viacom and News Corp. “sell,” partially blaming declines in advertising revenue.
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