Standard & Poor's Ratings Services gives a grim outlook for the media and entertainment industry in 2006, calling traditional advertising an area of slowing momentum after a sub-par revenue
performance in 2005. Since September, the stock ratings company has downgraded its 2005 outlook to 4 percent from 4.7 percent growth, citing Hurricanes Katrina and Rita and high oil prices, and
predicts just 5 percent overall growth in 2006. This pegs ad spending growth at about 1 percent higher than expected GDP growth. Major concerns in 2006 come from automakers and the retail sector, and
from an expected downturn in consumer spending following the holiday season. Online ad spending, however, is expected to continue its surge above 20 percent next year, due to the continued strength of
search and brand advertising. Even if growth doesn't meet 20 percent, S&P still expects online spending to surpass magazines next year, and overtake radio in 2008, assuming radio grows at the expected
1 to 2 percent a year.
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