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Published: October 7, 2011 at 03:03 AM GMT
Last Updated: October 11, 2011 at 03:03 AM GMT
This past week has seen a much anticipated launch and a tragic exit as well. That Apple (AAPL) co-founder Steve Jobs would pass away in the same week as the iPhone 4S's debut was a sad coincidence that seemed to draw even more attention to the future of the company. Nearly the entire digital world stood in a shocked moment of silence on Thursday evening as the news spread. However, the transformations that Jobs had already set in motion will continue to poke, prod, and push the media industry in entirely new directions.
As the fourth quarter started out with a dreary beginning, this week's outlook for media tells a mixed story.
ZenithOptimedia (Euronext: PUB) has revised its 2011 estimates for global ad spending growth, cutting it down from its July estimate of 4.1% to 3.6%. At the same time, the U.S. forecast was changed upwards marginally to 2.2% from 2.1%. The media planning and buying firm cited particular strength in cable TV and Internet spending as the reason for slightly increasing the U.S. estimate. However, they repeated their claim that it will most likely take several years until American advertising spending reaches pre-recessionary levels.
The Interactive Advertising Bureau (IAB) has recently released its State of Mobile Measurement report and calls for "reliable, consistent mobile measurement standards" in order to truly leverage investments in the mobile ad market. RBR-TVBR's take away from the report points to the need for analyzing the regulatory environment, particularly consumer privacy concerns, in order to ensure that marketers are not inadvertently hindered by government regulation.
Chinese e-commerce giant Alibaba Group might be poised to make a significant role reversal with Yahoo (YHOO) if Alibaba CEO Jack Ma gets his wish to acquire the American Internet heavyweight. Yahoo bought a 40% stake in Ma's company in 2005, but Ma is interested in getting that piece back along with much more.
Unlike other potential buyers recently circling above Yahoo, Ma's interest is significant because he wants to buy all of Yahoo instead of taking it apart. However, a deal would be, in Ma's own words, "complicated." Not only have relations recently soured between the two companies, but the idea of a Chinese company buying an American one has drawn mixed reactions on security and political grounds.
On a less politically polarizing front, Yahoo has also entered into a deal with ABC News to provide more online news content to their audiences. As part of the arrangement, content from ABC News will be featured on Yahoo News, which is the most visited news website in the world. While ABC News president Ben Sherwood regarded the deal as "game-changing," analysts are calling this a relatively minor plus for Yahoo, which still has to find a permanent CEO.
According to a new report by Ad Age, revenues for the leading 100 media companies increased by 5.4% in 2010, rounding out to $322.5 billion. Unfortunately, they've lost some steam this year, as the largest media companies have only grown 4.5% in the first half of 2011.
In the latest attempt to try and restore Napster to its former glory (legally), online music service Rhapsody has bought the original file sharing service from BestBuy (BBY) in the hopes of challenging Spotify and its entrance into the U.S. market. Rhapsody has about 800,000 paying subscribers without including those from Napster (which have not been disclosed), while Spotify boasts around 2 million paid members, a Facebook endorsement, and a growing pull on marketers' attention.
While the much hyped Ultra Violet content management system, which lets you store all your media in the cloud and access it on any supported device, is set to launch at the end of this year, it still seems shrouded in a fair amount of mystery.
No devices or content have yet been approved, but Janney Montgomery Scott analyst Tony Wible thinks this will "ultimately improve portability and may re-invigorate home entrainment sales." However, the damage from cheap rentals may already be done, since Wible sees Ultra Violet as likely to only slow the decline. And speaking from the recent MIPCOM content event in Cannes, France, Miramax CEO Mike Lang said that the film industry really doesn't have a choice and must embrace Ultra Violet in the hopes of preserving sell-through in the home entertainment market.
Nomura analyst Michael Nathanson still remains bullish on the Americas media sector while assessing the current risk/reward payoffs (.pdf). Nathanson strongly believes that the investors with a one year time frame would best off by buying media stock at current levels. He finds Disney (DIS) and Viacom (VIA) especially compelling. The risk of negative ad estimate revisions is also considerably less acute than it was in the fall of 2008.
So even though the fourth quarter started rather sluggishly, there still might yet be a silver lining.
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