Goldman Sachs and Barclays Capital have both issued updates on what they see ahead for ad-supported industries. Both expect 2009 to be even worse for broadcasters than 2008.
Remember 2001? The analysts at Goldman Sachs are comparing what’s ahead next year to the downturn of 2001.
“Given the compressed earnings multiples across the sector, we believe the market is unwilling to pay for anything more than a 2001-like downturn in both local and national advertising – which was the steepest on record,” said Mark Wienkes and his team, Brian Karimzad and David Lefty.
The new estimates from Goldman Sachs are for TV network revenues to decline 10% in 2009, or 5% excluding the 2008 Olympics. Cable networks are expected to see a 1% decline. TV stations are forecast to suffer a 17% decline, or 7% excluding political. Radio’s revenue decline is estimated at 8% (which is the same percentage drop now forecast for this year). Outdoor is seen falling 5%, magazines 10% and newspapers 8% (an improvement from an estimated 13% drop this year). Online is still expected to grow in 2009, but not at the double-digit rates previously seen. Goldman Sachs is estimating that online ad revenues will gain 9% in 2009.
The Barclays Capital US Media and Internet team of analysts includes some names you may remember from Lehman Brothers: Craig Huber, Anthony DiClemente and Douglas Anmuth. They see total US advertising falling 5.5% in 2009 on top of a 3.6% decline in 2008. National spending is projected to decline 4.5%, while local plunges 7.1%. They also refer back to 1991 and 2001 for comparisons.
The Barclays analysts see TV network revenues dropping 8% next year. TV station revenues are expected to drop 8.3%. Cable networks are still seen having some growth, although only 1.8%. Their estimate is that radio revenues will drop 7.4% (after falling 7.2% in 2008). Outdoor is seen as flat in 2009, magazines down 12.5% and newspaper advertising down 12% (after falling 16.5% this year). Internet advertising is expected to grow 14.1% next year, down a bit from the projected 16.9% growth in 2008.
RBR/TVBR observation: The recent meltdown in the financial markets has certainly put a damper on any hopes of 2009 being a strong recovery year. Right now everyone is just hoping it might become a year for the economy to stabilize. It is not a happy time to be just beginning the final quarter of 2008 and having to speculate about whether things will get better in 2010.