Wary Of Ad Cutbacks, Investors Punish 'Local' Media

Local media companies -- cable, broadcast television, radio, newspapers, print directories, outdoor and digital/online advertising -- did worse as a group in terms of their stock price in 2011 than the broader market. The drop was partly due to concerns over the expected pull back of advertising revenues.

This analysis comes from BIA/Kelsey, a local media advisor, which notes that its local media index of some 60 companies it follows fell 18.7%. The local media index (LMI) has an aggregate market capitalization of $2.2 trillion. By way of comparison, the S&P 500 Index was virtually unchanged in 2011.

Mark Fratrik, vice president of BIA/Kelsey, stated: "Last year's poor performance of the LMI was caused by deep concerns over the health of the global economy in Q3 and the belief that businesses would severely cut back on their advertising spending. While the last quarter of 2011 saw a rebound in media stocks, the drop-off had been too significant to overcome."

Breaking down local media by category, old-line print platforms Yellow Pages and Newspapers took the biggest hits, 77.5% and 27.8%, respectively.

On the positive side were online advertising and search, up 8.0%; diversified media, with a 7.8% improvement;  broadcast television, climbing 6.1%; and radio, 2.1% higher.

Future shifts to digital platforms will help local media companies in the future. An earlier BIA/Kelsey forecast says by 2015, about 25% of all ad dollars spent in local media will be in digital media.



1 comment about "Wary Of Ad Cutbacks, Investors Punish 'Local' Media".
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  1. Paul Benjou from The Center for Media Management Strategies, January 18, 2012 at 9:32 a.m.

    The gyrations of financial market economics is a poor bellweather for local media performance. Poor business decisions at the corporate level, influenced by media index projections, only serve to stir an otherwise stable simmer.

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