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Private Equity Group Revises Media Forecast From 5 Percent Growth to Slight Decline

Down economy forces VSS to adjust 2009 projections.



By Jason Fell
02/23/2009

Veronis Suhler Stevenson Monday revised its annual five-year communications industry forecast (2008 to 2012) to show a 0.4 percent decline in overall media spend in 2009, down from the 5.4 percent gain the private equity firm previously forecasted. Overall advertising spending is projected to drop 7.4 percent this year—the first two-year drop in 75 years.

According to VSS co-founder partner John Suhler, the revision was necessitated by the impact the down economy has had on all industries, including communications and media.

Some segments will be impacted more than others, the firm said. Newspaper publishing leads the decliners, with a projected contraction of 16.2 percent in 2009. Following closely is broadcast television, which VSS projects will decline 9 percent, and consumer magazines, which is expected to decline 8.5 percent.

Even marketing services, which include direct marketing, promotions and branded entertainment, will decline 1.3 percent this year, VSS said.

“The newer or what he have labeled the alternative segments of both sectors continue to experience positive growth in ’08 and ’09,” Suhler said. “The end user sectors, both consumer and institutional, representing the majority of spending in the communications industry, have been revised to show slower but positive growth, also in both years.”

Those segments include pure-play Internet and mobile services (expected to grow 9.1 percent this year, down from 15.5 percent), mobile content (up 34.2 percent) and videogames (up 19.5 percent).

[VSS is an investor in FOLIO: parent company Red 7 Media.]

By Jason Fell
02/23/2009







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