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Why the Media Sector Will Remain 'Choppy': Analyst

We’re on the road to recovery on the ad market front, but it will be "choppy" going into 2011 given the state of consumer spending, said Spencer Wang, entertainment and interactive TV analyst at Credit Suisse. He shared his insight on the sector.

“On the advertising part, we moderated our 2011 ad growth estimates to reflect a moderate growth environment,” Wang told CNBC.

“There is a high correlation between the economy and ad spending. 90 percent correlated with GDP and 85 percent correlated with leading economic indicators, which have been soft—so we’re taking a cautious stance as we look into 2011.”

“A bigger worry for us is the growth in over the top Internet delivered video services like AppleTV, Netflix, GoogleTV potentially, etc.,” he said.

Credit Suisse recently downgraded the entertainment sector to “underweight” from “market weight,” citing increased risk from "over-the-top" (OTT) Internet-delivered video and more conservative calendar ad forecasts, given recent data which suggest an economic slowdown.

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Disclosures:

Wang does not own shares of CMCSA, DISH, NWSA, DTV, TWC, VIAB or DIS.

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