VSS Revises Media Forecast

NEW YORK: Private-equity firm Veronis Suhler Stevenson (VSS) has revised its 2009 forecasts for the media and communications industry, predicting a 0.4-percent decline in the U.S., versus its previous projection of 4.9-percent growth.

The company has issued a special Mid-Term Forecast in the wake of the global recession, updating its Communications Industry Forecast 2008-2012. It predicts that overall media spend will fall 0.4 percent this year, following a 2.3-percent increase in 2008. “We believe this mid-term forecast will present investors with a helpful guidepost in a challenging economic environment,” said James Rutherfurd, the executive VP and managing director at VSS. “The media, information and education industries have been negatively impacted by the economic downturn. However, as a whole these industries (which comprise the communications industry) have performed better than many other sectors of the U.S. economy, and we are confident that over the medium and long term, the communications industry will regain momentum. The communications industry has outgrown GDP growth in all of the periods of economic expansion studied since the Second World War.”

Newspaper publishing is expected to be the most affected by the downturn, with a 16.2-percent contraction, following last year’s 13.5-percent fall. Broadcast television will suffer a 9-percent decline, versus its 0.5-percent fall in 2008. Consumer magazine publishing is expected to decrease by 8.5 percent, followed by broadcast and satellite radio with a 7.2-percent fall. Overall advertising spending will drop 7.4 percent in 2009.

"The unprecedented changes in our financial markets beginning in mid September have had a profound impact on most industries and the communications industry has not been spared,” commented John Suhler, co-founder and general partner of VSS. "The downturn in our economy resulting from the financial markets collapse has added pressure to the secular trends already present and has accelerated the down pressure on the traditional segments of the consumer advertising and marketing services sectors. However, the newer or what we have labeled the alternative segments of both sectors continue to experience positive growth in ’08 and ’09 and the end user sectors, both consumer and institutional, representing the majority of spending in the communications industry, have been revised to show slower but positive growth, also in both years."

Growth areas include the pure-play Internet and mobile services segment, with a projected 9.1-percent gain. Mobile content and video games will record growth rates of 34.2 percent and 19.5 percent, respectively.