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Household names in magazines and newspaper sectors face 'lethal threat' | Media | guardian.co.uk
Household names in magazines and newspaper sectors face 'lethal threat´ Dozens of magazines and newspapers that are household names are under "lethal threat" and could disappear by the end of the year as advertising revenue continues to fall away during the summer, a new report warns. The report, by the WPP-owned media-buying operation Group M, has significant......

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Household names in magazines and newspaper sectors face 'lethal threat´

Dozens of magazines and newspapers that are household names are under "lethal threat" and could disappear by the end of the year as advertising revenue continues to fall away during the summer, a new report warns.

The report, by the WPP-owned media-buying operation Group M, has significantly revised down its previous ad revenue forecasts for the newspaper and magazine sectors for 2009 and is expecting a major shakeout before the end of the year as smaller players are cut from a share of dwindling ad budgets.

This bleak forecast for the UK newspaper and magazine industry scotches recent tentative hopes that the ad recession might bottom out after a dire first half of 2009.

Group M has forecast that the newspaper industry will see ad revenue fall by 26% year on year across 2009 – a significant downward revision down from its forecast in March of a 20% decline and, back in December, of a 15% slide.

National newspapers are expected to be down 18.6% year on year for 2009 and the regional newspaper industry a massive 32%.

Group M predicts that the consumer magazine ad market will be down 20% year on year for 2009, a revision down from 16% in March and 9% in December.

Group M also has concerns about some players in the TV market, such as Channel Five, which suffered ad revenue decline of close to 30% year-on-year in the first quarter.

But overall the media buyer has maintained its forecast for the total UK TV market steady from its March prediction of a 14% decline across 2009.

"No previous ad recession has put household media names at risk like this one has, from local newspapers to high-street magazines to national TV channels," said the Group M futures director, Adam Smith.

"Advertiser demand is set to remain weak this summer so it is possible mergers, restructures and closures will accelerate as we move into the fourth quarter," he added.

In the national newspaper market, Group M argues that the stronger groups, such as Sun and Times publisher News International, will continue to pressurise smaller players.

"Weaker titles have greater need of cash today than yield tomorrow, so these are the ones making the greatest concessions," said the report. "Weaker titles are less able to deal with other adversity like paper prices (up about a quarter since sterling´s slide), amortising plant investment, and to finance digital diversity. The strong therefore get stronger. In national newspapers, this means News International and Associated [Newspapers]. Both have circled their wagons by consolidating their sales forces to negotiate harder."

In the consumer magazine market, the report has identified a range of secondary and tertiary media brands that will struggle, leading to "decision time on viability for the weakest" in the final three months of 2009.

Group M forecasts that magazine sub-sectors under threat include paid-for monthlies with expensive editorial content such as luxury photo shoots and circulation of less than 100,000 sales; these, it says, are at "potentially fatal risk".

"Secondary titles may not have enough cash or the time for prevention [and] tertiary titles certainly do not," said the report. "Summer will be a test. The fourth quarter will be decision time on viability for the weakest."

However, the report argued that the TV market is, relatively speaking, stabilising because as the price of airtime has fallen advertisers have been lured back.

"TV advertisers have generally been taking cash out as audiences have grown cheaper, but we think new money is coming in from other media, with TV magnanimously easing its traditional punishment for money arriving ´late´," Group M said.

"It is however a measure of this unprecedented ad recession that it threatens Channel 4 and Channel Five as presently constituted, and IDS [the TV ad house across Virgin Media TV´s channels, which are up for sale] must wonder who it will be representing next year.

"Some shuffled consolidation may follow involving any or all UK broadcasters including Sky and Virgin, plus some overseas ones. There may be fewer airtime sales points by this time next year, so we remain alert to unpredictable shifts in power."


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MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=4158



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