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], Disney [DIS
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]and CBS [CBS
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], and is likely to also hit News Corp [NWS
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]which reports tomorrow, and Time Warner [TWX
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] on Wednesday. The media industry is facing all sorts of hurdles, including increasing fragmentation and the challenge of monetizing content online. Particularly unfortunate sector challenges at a time when the ad cycle is at a low.
In the first quarter total ad spending grew only .6 percent, with major spenders cutting back -- Ford reducing its spend in the quarter by nearly one third-- according to TNS. And looking towards full-year numbers, Interpublic's [IPG
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] Magna Unit cut projections for 2008 growth to 2 percent from 3.7 percent. And 2 percent growth would make 2008 one of advertising's worst years since 1990.
And while the ad cycle should improve in 2009, the comps will still be incredibly tough. This year numbers are bolstered by spend on political and Olympic ads, so even if real estate and financial ads come back, 2009 still won't look great in comparison.
So how are the media giants coping so far? Last week Viacom, Disney and CBS all talked about how they're cutting costs to help compensate. Viacom's benefiting from strong performance at movie theaters. Disney's got higher cable fees and theme park strength working in its favor. CBS is managing to grow outdoor advertising quite well. But most of CBS' revenue comes from ads, so it'll be hit first and hardest as this cycle continues.
Tomorrow News Corp reports after the bell, and second to CBS it's the media giant with the biggest exposure to the ad markets. And News Corp is particularly invested in newspapers, which are hit especially hard right now as ad dollars shift to the Internet. Investors will be looking to hear Rupert Murdoch's strategy for the company's newspapers in this environment.
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