Tuesday, November 22, 2005 - The Progress & Freedom Foundation Blog

More Bad News for Old Media

The news just keeps getting worse for old media sectors and providers. Almost every Wall Street report or consultant survey that comes out these days predicts a dire situation for old media operators in coming years. New technologies, distribution outlets, the digitization of all information, complete media portability, and rapidly changing consumer expectations are combining to undermine the hegemony of the old media guard.

The latest report echoing this theme comes from a Kagan newsletter entitled, "Media Giants Cling To 'Growth' Label Even As Their Core Businesses Plateau." This sobering report, which is based on a much longer study due out shortly, notes that the media industry's "self proclaimed 'growth stocks' no longer show impressive growth." "Over the past five years, [the share prices for] Disney, Comcast, News Corp., Time Warner, Viacom and other big names have underperformed the broad stock market, and their organic revenue gains are nothing special.

As a result, the Kagan report predicts anemic growth for old media operators in coming years. From 2005-2015, they project the following compound annual growth rates for various media outlets / services:

1% for daily newspapers;
2% for premium pay TV channels;
2.3% for TV stations;
2.3% for networks;
3.9% for movies;
4.4% for basic cable;

This echoes what Daniel English and I revealed in our recent analysis of the financial performance 5 leading media company stocks. In "Testing 'Media Monopoly' Claims: A Look at What Markets Say," Daniel and I found evaluate the market performance of Time Warner, News Corp., Clear Channel, Comcast, and Viacom over the past five years and show that they have lost a whopping 52 percent of their market value (in terms of market capitalization). Moreover, we charted the performance of the entire Dow Jones U.S. Broadcasting & Entertainment Index and showed that it is down almost 45 percent below where it stood in 2000.

Meanwhile, Google's over $400 a share and the Internet continues to steal away countless consumers of old media services. An yet, there are some people in this country who still lose sleep at night about the supposed big, bad "media monopolies" that supposedly rule the universe and control our thoughts! Give me a break.

posted by Adam Thierer @ 10:56 AM | Mass Media