Investment: Media trapped by the advertising slowdown
Tuesday 06 October 1998
Take the media sector. This traditionally highly-rated sector has been hit hard by the recent shakeout. Even some of the largest companies have seen their share prices fall as much as 50 per cent. The culprit is concerns about advertising. Although forecasts are for a slowdown - rather than a fall - in spending over the next few years, the market believes the actual figures will prove gloomier.
Investors have a point. During the last recession, advertising fell 18 per cent from its peak in 1989 to its trough in 1992. Most media companies have high fixed costs, so the effect on profits was even more dramatic. However, not all firms are heavily exposed to the cycle. Most vulnerable are radio and outdoor advertisers, while regional newspapers depend on highly volatile recruitment advertising. National newspapers and TV companies will also suffer, although to a lesser extent.
In this context the hammering handed out to United News & Media, the Express to ITV group, makes superficial sense. However, Lord Hollick's company also derives a large chunk of its revenues from exhibitions, which are more stable. With the shares down 45 per cent in the past four months and the demerger of its Garban moneybroking division imminent, United - at 519p yesterday - is worth a look.
British Sky Broadcasting also continues to offer value. Digital satellite has been launched and BSkyB looks well-placed to build up a decent subscriber base. Provided the acquisition of Manchester United is cleared, the shares - at 471p after a strong run - should continue to outperform.
The market's harshest treatment has been reserved for Reed Elsevier, which owes its recent derating to nothing but worries about management succession. The market will probably steer clear until a new chief executive is found. But with its unique clutch of must-have business and legal information, Reed is the closest the media sector comes to being recession-proof. At 476p, buy the shares.
Board creates magnetic field to achieve lift
Like Madonna, Sister Cristina Scuccia's video is also set in Venice
Singer says the track was 'force-fed down people's throats'
techThe original free dating app will remain the same, developers say
Endangered species spotted in a creek in the Qinling mountains
- 1 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 2 Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
- 3 Drink alcohol and eat meat to improve male fertility - but cut down on coffee, studies suggest
- 4 Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
- 5 The inventor of the Facebook 'like' button says he never made a 'dislike' button because he feared the 'unfortunate consequences'
Ukraine crisis: Donetsk 'tactical missile' explosion at factory sends blast wave across rebel-held city
Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
Oscar de la Renta dead: Legendary US fashion designer dies after long cancer battle aged 82
Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
Super-sized ships arrive in Britain: How big can they get?
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
Lord Freud: Tory welfare minister apologises after saying disabled people are 'not worth’ the minimum wage
Lord Freud hangs on as MPs of all parties 'call for his head' over disability comments
iJobs Money & Business
£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...
£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...
£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....