• Forbes, Wednesday, July 8, 2009 10:15 PM

Mainstream media's advertising meltdown is the "new normal" for the ad business, says a new study from private equity fund Catalyst Investors. The cause: plummeting consumer spending and the Web's ability to eat away at prices.

Taking a historic perspective, Catalyst blames the Internet. Its unlimited content and its ability to measure ad impact broke "the oligopolistic pricing power that traditional media enjoyed in the 1980s and 1990s." A further dip in ad spending as a percent of GDP will occur over the next two to three years, predicts Catalyst.

There are some bright spots. The slide in radio and magazine revenue will bottom in 2009, says the report, and a 5% revenue bounce in the radio and magazine sectors is expected in 2011. Diminishing equity value across the broadcasting and publishing industries also means they will see more dilution and debt restructuring. The next two years could be "an opportune time" for private equity players to get back in the media game, says the report.

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