a decade ago some 10 per cent of the Footsie was made up of media companies: now the figure is nearer 3 per cent. But the decline seems to be reversing, with the online newspaper Huffington Post snapped up by the internet giant AOL for £196m last month and, this week, the digital sports media company Perform announcing that it is embarking on a £500m London flotation.
There have been positive recent results from ITV, and the most recent advertising expenditure report showed the beginning of what looks likely to be an upward spend trend. The activity suggests that media stocks could prove an interesting play for investors looking for the next growth sector. That's media in its broadest sense, taking in the traditional publishers, broadcasters and film-makers as well as the new breed of digital media firms.
"I think it's a very exciting time for the media sector, there is more consumption of media than at any other time in history," says Charles McIntyre, manager of IBIS Media venture capital trust. "On average people in the UK spend nearly half of their waking hours using media and communications services: this is a new age."
Driving the media industry forward at the moment is change, and that is key to its appeal as an investment opportunity. New, relatively small businesses are able to steal a march on long-established firms that are less swift to change. The key is finding the right sectors that will benefit from what could be phenomenal growth, says McIntyre.
"If you are looking to invest in media, identifying the sectors you want to invest in is important," he says. "Find businesses that benefit from the combined changes of the economic cycle and structural change. More is now spent on advertising on the internet than on television, for instance, which is a big change from a few years ago, so you can see within various different subsectors where the tide is rising."
The media sector is made up of many different parts, from advertisers, television production companies, digital marketing agencies and specialist publishers. With the pace of change increasing, getting in at the start of something is clearly going to offer more potential than joining the party when everyone else has already spotted the opportunity.
"Within the media sector there are some rather interesting winds of change, particularly in the digital environment," points out McIntyre. "Big names like Twitter, Facebook and Linked-In are attracting a lot of investor attention, and yet only five or six years ago hardly anyone, or no one, would have heard of them."
In other words, investors should be seeking the next Twitter, not investing in the last MySpace. The latter was snapped up by Rupert Murdoch's News Corp for £333m in 2005, but he is now rumoured to be trying to sell it – at a massive loss.
In many ways Murdoch is the ultimate modern media mogul, with the influence of BSkyB coming under the spotlight in recent weeks after his takeover of the broadcaster was given the green light by the Government.
"In years to come it's likely that people will feel less concerned about what the BSkyB deal actually meant, as the way that news is distributed will have changed significantly," says McIntyre.
That change is being driven by the growth of new gadgets, such as iPads and Android phones, that allow people to consume media more easily. Rather than killing off media, the new technology now looks set to lay the foundations for its fresh success.
Oliver Slipper, co-chief executive of Perform, which plans to float by Easter, certainly believes that the rapid technological change will benefit new media firms like his.
Perform was created in just 2007, through the merger of the sports website firm Premium TV and the rights agency Inform Group. The company has a catalogue of more than 200 sports leagues, tournaments and events which it sells on. Clients include bookmakers and third-party websites such as Independent.co.uk. It also owns its own assets such as Chelsea TV Online, which makes money from subscribers.
With revenues of just £67.4m in 2010, a valuation of £500m may seem generous. Not so, says Slipper.
"We have first-mover advantage in distribution and monetising digital sports content," he told The Independent. "This is part of an expansion drive; it will be a fast growth business."
The offering is pretty far removed from traditional media companies, but its rapid growth is likely to be repeated in other areas as new firms spring up to take advantage of the increasing demand for media through the many new different channels.
For investors, the challenge, as ever, is finding the right opportunity at the right price. Investing directly in the stocks of media firms could prove a sound decision – if the stock takes off. For tax-conscious investors, some of the shares can be sheltered in an ISA, to avoid income or capital gains tax demands.
For investors preferring to use the expertise of a fund manager, there are few specialist media funds available: most are hedge funds or private equity funds. However, there are a number of venture capital trusts, which are high-risk but highly tax efficient. If you invest in VCTs, which must buy into new companies, you get a 30 per cent tax rebate with no capital gains to pay. But, and it's a big but, you risk losing your capital if the firms in the VCT collapse.
Is it worth the risk? IBIS's McIntyre thinks so. "This is not the dot.com bubble again. The digital space today has businesses with established revenue streams."