US media gloomy on upturn

13 July 2009

SUN VALLEY, IDAHO: Leading media executives from television, film and the internet are cautioning that advertising will only recover slowly with some, including Google's Eric Schmidt, describing the slow recovery from recession as "the new normal."

Schmidt, together with News Corporation's Rupert Murdoch and Sony's Howard Stringer, were speaking at the annual meeting organised by specialist media investment bank Allen & Co.

Schmidt's company Google, with its dominant position in search, has weathered the economic storms better than most but he discussed the possibility of a 'square root recovery,' meaning the economy could rebound but then flatten, like a square root sign.

More traditional media empires face bigger problems and News Corporation's Murdoch said in an interview with his own new Fox Business Channel, "I'm shocked at the business mood which is about whether we're at the bottom or going lower but that it's going to take years, like five years at least, before we see any real growth."

Sony's Stringer was equally cautious. "There's no evidence to be really optimistic…people just aren't sure what's going to happen," he said. Earlier in the week Stringer observed that he thought he had detected green shoots of recovery, "but it's a very pale shade of green."

The biggest worry for the media moguls is that consumers' media consumption is changing permanently to the point where traditional media loses much of its appeal and therefore is far less attractive to advertisers. At the same time they are uncertain how to monetize their internet investment.

A secondary factor is the way credit tightening has stemmed the flow of bids and deals in the media sector, traditionally one of its drivers.

"I don't think you're going to get the access to capital so readily now," said NBC Universal head Jeffrey Zucker. "Buyers are looking for bargains, sellers are looking to get what they think they were worth a year ago…I think you'll probably see nothing in the media space for the rest of this year."

Data sourced from Reuters; additional content by WARC staff