Show me the money – CEOs to address markets

THE financial reporting season begins next week with the industry’s two new chief executives – Fairfax Media’s Brian McCarthy and West Australian Newspapers’ Chris Wharton – to take the podium to address shareholders and market analysts.

The forecasts of WAN and Fairfax Media are seen as bellwether statements for economic activity.

The last round of fiscal reports were provided by CEOs who are no longer on the scene – WAN’s Ken Steinke and Fairfax Media’s David Kirk, who incidentally took Australian citizenship last week and stated his intention to stay in the country.

Both Mr Steinke, a former long-serving PANPA board member, and Mr Kirk previously told shareholders they had little visibility into the medium-term economic conditions and revenues for their companies. This was seen as a reflection of the concern among leading retailers who have become a major source of display advertising revenue.

The task of Mr Wharton and Mr McCarthy will be to fill in the blanks. They will focus on business strategy, cost-containment and efficiency initiatives. The outlook for advertising revenue will be an all-important element for predicting not only fortunes of newspapers but the Australian economy as a whole.

Leading newspapers today reported the views of financial analysts, who predictably see a tough time ahead.

The Australian’s Jane Schulze has spoken with Goldman Sachs JBWere media analyst Christian Guerra, who is quoted as saying: “A recovery in earnings is clearly a prerequisite to sustained outperformance… but we are expecting very tough conditions for media companies for some time. We believe the ad market will fall 3.7 percent in 2009, rise 2.3 percent in 2010 and rise 7.1 percent in 2011.”

The same analyst told Miriam Steffens of the Sydney Morning Herald that ad budgets on metropolitan TV would leak a further A$50 million a year to the benefit of pay TV and online, which may draw a further A$200 million in annual sales from other media.

Steffens also quotes ABN Amro’s senior media analyst, Fraser McLeish, as saying balance sheets and debt levels would be a major focus when companies report their results next month

PANPA deputy president and News Ltd Marketing Director Joe Talcott tells Paul McIntyre, of the rival Sydney Morning Herald, that advertisers will tend to stick with what works, “whether that’s newspapers or TV”, and then seek innovative, below-the-line tactics.

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