The global winners in media over the next five years will be Internet
advertising, video games, TV subscriptions and licence fees, and filmed
entertainment, writes Adele Shevel in Business Times.


The losers will be business-to-business publications, newspapers and consumer magazines.

This is according to industry “bible” PricewaterhouseCoopers (PwC) Global Entertainment and Media Outlook, which this month released its industry benchmark for the next five years.

The report predicts spending in the global entertainment and media market will be only 0.2% higher in 2011 than in 2008. Global advertising is forecast to decrease 12.1% this year followed by a further 2.7% decline next year, and is expected to be 13.3% lower in 2011 than in 2008.

These figures will be particularly alarming for print media. The three big listed print players in SA are Naspers, Avusa and Caxton. (The Independent News & Media Group South Africa is unlisted).

Avusa’s results — which CEO Prakash Desai called “credible” in light of the current economic conditions — came out on Thursday.

Avusa’s media unit posted a revenue gain of 6% in spite of the tough economy. But BDFM, comprising Business Day and the Financial Mail, incurred a loss of R9-million against last year’s R7-million profit, mainly due to development costs, whereas losses at The Times are narrowing.

Digital businesses now contribute 23% of earnings before interest and tax, calming sceptics who have accused the company of failing to enter that arena.

Analysts laud management for reacting to the deteriorating advertising cycle by cutting costs and renegotiating printing contracts, which will protect margins in the coming year.

Khulekani Dlamini, portfolio manager at Afena Capital, said there is room to streamline the business further by exiting non-performing operations. Dlamini believes Avusa should realise margins of at least 12% or higher, given some of the brands in its stable.

Cinema continues to be problematic.

Click here to read the full report, posted on the Busoiness Times website.