Media investors fear recession

MEDIA INVESTORS FEAR RECESSION
[SOURCE: MediaBiz, AUTHOR: Paul R La Monica]
[Commentary] In the past few weeks, media investors have grown increasingly worried about the possibility of an economic slowdown hitting advertising spending in 2008. Next year, in theory, should be a banner year for media companies thanks to that magical “quadrennial” effect: advertising spending typically is boosted every four years by the Summer Olympics and a U.S. presidential election. But many economists — and even Federal Reserve chairman Ben Bernanke — have said that the economy is likely to slow in the fourth quarter, and that the first half of 2008 could be sluggish due to the subprime mortgage meltdown and overall weakness in the housing market. Shares of media conglomerates CBS, Walt Disney, News Corp. and my parent company Time Warner have each tumbled about 5 percent so far this month. And Internet titans Google and Yahoo! have taken an even bigger hit. Google’s stock has tumbled 10 percent while Yahoo has experienced a 14 percent haircut. David Bank, an analyst with RBC Capital Markets, said that shares of pure-play radio and publishing stocks probably would fare worse than more diversified media companies, whose fortunes aren’t exclusively tied to advertising.
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