The publishing and printing industry is indeed hard pressed. Having yet to embrace and optimise the advent of the internet, the industry is now having to dig deep to survive in the downturn. As such, 2009 will be characterised by more cost and job cuts, consolidation and title closures.
While many publishers have yet to strike that optimal balance between print and online, some, like Trinity Mirror have discovered that despite investing in and developing a sound internet offering, digital advertising revenue is not meeting the shortfall created by the slump in print advertising. And with analysts expecting this advertising depression to continue until 2010, things are set to get a lot worse, before they get any better.
In addition, digital advertising, while still a growth area, is set to slow significantly this year. Media research specialist, Enders Analysis, says online advertising will grow at just 2.1 per cent in 2009, down from 20 per cent in 2008, before recovering to 9.3 per cent in 2010. Nevertheless, Enders says online classifieds have already overtaken directories, which spells further bad news for Yell Group.
Meanwhile, with unemployment at an 11-year high, sales of private motors frozen and the property market showing little signs of recovery, regional publishers like Johnston Press have been crippled by the dearth in classified advertising. Moreover, analysts note that online classified advertising has already overtaken print and that this once highly treasured income stream will continue to dwindle. Indeed, Enders expects print classified advertising in the UK to fall to £3.7bn this year, after already contracting from £4.8bn to £4.2bn in 2008.
So 2009 will largely be characterised by further job and cost cuts and even more title closures. Independent News and Media's move to relocate two of its titles - after announcing job cuts - will probably be replicated by other players. Similarly, outsourcing of sales and other non-editorial functions will be explored as costs continue to come under pressure.
Business-to-business titles are expected to continue to struggle, while consumer magazines are forecast to see an 8 per cent decline in revenues and a 7 per cent decline in circulation, according to research group Billets. Claire Enders, founder of Enders Analysis, expects a third of all publications - including at least two national titles - to cease publication this year, while Billets expects Sunday titles to fare the worst.
Information groups Thomson Reuters and Reed Elsevier should demonstrate more resilience throughout the year, although with the $1bn (£666m) sale of Reed Business Information now cancelled - due to uncompromising credit markets - Reed will be less adaptable.
PRINTING AND PUBLISHING
Broadcasting and media agencies
The economic malaise has no doubt also weighed on the broadcast arena with television advertising contracting 5 per cent in the fourth quarter of 2008, according to research by Billets. Analysts are expecting dramatic declines in revenues in the first and second quarters of the year, and smaller declines in the remaining two quarters of 2009. As such, Billets predicts revenues at ITV to contract by 7 per cent over the course of the year with advertising revenues at BSkyB estimated to fall by 9 per cent.
BSkyB, however, remains occupied with its reportedly stalled deal to acquire Tiscali's broadband assets and yet another attempt to try to cling on to its 17.9 per cent stake in ITV, although the odds appear firmly stacked against it. The Competition Appeal Tribunal ordered BSkyB to reduce its stake in ITV to 7.5 per cent last September, and, in an even larger blow to the group, revealed it would also consider Virgin Media's suggestion to order the group to dispose of its entire holdings in ITV. Shares in ITV have plummeted to a third of the 135p a share price BSkyB paid for the shareholding and the group is sitting on a hefty loss of £658m.
ITV also faces its own set of problems, and may have to write down its investment in Friends Reunited, for which it paid £120m three years ago. In addition, the video-on-demand venture by BBC, Channel 4 and ITV - project Kangaroo - looks set to be scrapped or at least compromised, following recommendations from the Competition Commission last December. The final report is due on 8 February, and analysts at Enders Analysis expect the Commission to suggest a collaboration over the use of BBC's already successful iPlayer as an alternative. At least the company can take some comfort from the fact that television viewing rises in times of recession.
Meanwhile, media agencies like WPP are busy trimming all areas where margins are under pressure. The group has reportedly announced job cuts in western Europe and North America and will continue to focus on emerging markets such as South America and the Far East. Analysts believe the group has kicked off the year by cutting around 10 per cent of the workforce at advertising company Ogilvy (mainly North American operations) and it looks unlikely that WPP will be a key consolidator in the sector this year, despite being linked to Aegis in 2005.
But Aegis itself is likely to be immersed in a sea of change following the arrival of chairman John Napier last July. A disagreement between Mr Napier and chief executive Robert Lermill on the direction of the agency led to the latter's departure in November. Aegis is reported to be conducting a strategic review to explore the disposal of research arm Synovate, and a possible tie-up with French agency Havas, which shares a common prominent shareholder with Aegis - French millionaire Vincent Bollore.
There is also scope for further M&A activity in the sector through Greek millionaire Theodore Kyriakou, who is reportedly looking to acquire UK media assets. Armed with a €2bn (£1.8bn) warchest, he is apparently seeking non-print media assets over the next six to 18 months.
BROADCASTING AND MEDIA AGENCIES
