Media analysts: Online can’t make up for print revenue losses

In his 2007 prognosis, Goldman Sachs’ media analyst Peter Appert projects a 4.4% drop since last year in US newspaper ad revenue, with a 10.8% loss in classified and 5% in national advertising.

Appert gave McClatchy and The New York Times Co. a “sell” rating, but Wachovia, raised the former from “market perform” to outperform” because the company has reduced debt through its Knight Ridder purchase.  In addition, Sam Zell’s $8.2 billion plan to take Tribune private both sparked uncertainty in the market as to the security of the deal and earned the company a “buy” rating from Paul Ginocchio at Deutsche Bank.

More optimistically, ZenithOptimedia maintains its forecast of 3.7% growth for 2007 and Carat still foresees 5.1% growth, having reduced its US spend by one-tenth of a point.  On a global scale, media analysts report that numbers look more promising, thanks in particular to China and India.  ZenithOptimedia projects that globally by 2009, newspapers will grow by $135 billion in ad revenue, increasing $7 billion from 2007’s forecast.

Still, analysts cannot help but issue sobering predictions in light of estimated Internet growth.  Whereas this year’s estimation comprises 28.4% of global ad spend, ZenithOptimedia’s aforementioned projection for 2009 will only make up 26.8%, thanks to a projected $14 billion gain for the Internet over the same period.

Media analysts predict that it will take at least five years for online revenues to make up for these print losses.  Currently, newspapers value each print reader at $500 to $1,200 in circulation and advertising cash, while an online reader is worth less than $10.

As uncertainty and pessimism abound, 2008 provides some hope on the horizon for US media with the 2008 summer Olympics and a Presidential election, traditionally ad-heavy events that may give the industry a financial boost.

Source: Follow the Media