The many faces of stagnation

Michael Hedges May 4, 2009

In the front lines of the media world there’s no need for another expert reporting the obvious. Each week brings another irritatingly real story of causalities where media and money intersect. Big media is still big, says a new study; just a bit less so.

The worlds biggest media companies are among the worlds most watched companies. To paraphrase American TV comedian David Letterman; There’s no business like media. There are a hundred like accounting.

The German media policy think tank IfM (Institut für Medien- und Kommunikationspolitik) released its annual report (April 29) on the 50 biggest media companies.The measure is gross receipts, gross revenue, turnover. In 2008 the gross receipts for those top 50 media companies was €360.88 billion, slightly lower than the figure for 2007 - €362.03 billion. In 2006 revenues for the top 50 media companies was estimated at €353.28 billion. The IfM says media revenue is stagnating. (See IfM Top 50 Ranking here

The top five of the big media companies are American; in order, Time Warner, Walt Disney, Comcast, News Corp and Viacom. Of those only News Corp increased revenue, the benefit from the Dow Jones / Wall Street Journal acquisition. And that’s a common theme. Acquisitions, few that there were, raised corporate revenues.

Similarly, Thompson Reuters moved from 13th place in the 2007 top 50 to 11th in 2008, increasing its revenue from €7.18 billion to €9.14 billion.

Some of those increasing revenue over 2007 levels did it the other way, selling something. Sixth place among the top 50 is Sony Entertainment, based in Tokyo. Sony’s 2008 revenue was €16.56 billion, up from €14.65 billion. Sony off-loaded Sony BMG to partner Bertelsmann. Sony moved up one ranking while Bertelsmann fell behind.

Bertelsmann is and continues to be Europe’s biggest media company, billing €16.11 billion in 2008. That’s down from €18.76 billion in 2007. Write offs from the Sony BMG and selling its North American book and DVD consumer division to Najafi Companies in July.

Time Warner, ranked number one in the world by revenues, will surely lose that lofty slot when it off-loads AOL sometime this year.

Vivendi is Europe’s second biggest media company, ranked 9th worldwide. It’s revenues grew to €11.295 billion in 2008 from €10.251 billion. Lagardère Media ranks third in Europe and 12th globally with revenues of €8.21 billion, down from 11th place and €8.58 billion. Reed Elsevier, with €6.6 billion revenues in 2008, ranked 4th in Europe and 16th overall.

Included in the IfM study are public and State broadcasters, a reminder that these, too, are media biggies. German public television network ARD ranked 5th biggest in Europe by revenue - €6.13 billion – and 17th worldwide. The BBC is ranked 7th in Europe with €5.54 billion revenue in 2008, ranking 19th in the world. Japan’s State broadcaster NHK ranks 27th in the world with €4.31 billion revenue. Italy’s public broadcaster RAI ranks 37th in the world with €3.21 billion revenue. France Télévisions, the French public broadcaster, ranked 43th with €2.93 billion revenue.

IfM project director Thomas Schnedler observed that revenues for public / State broadcasters and telecoms remained “relatively stable, in international comparison, through strategic partnerships and secure content.”

The biggest winners – those companies increasing revenue year to year – were US cable operator Liberty Media (27.3%), Thompson Reuters (27.2%), Sony Entertainment (13%), ProSiebenSat.1 (13%) and Grupo Prisa (10.5%). On the other end of that scale were ITV (-17.1%), Virgin Media (-16.2%), Gannett (-14.8%), Bertelsmann (-14.1%) and McGraw-Hill (-11.4%). Japanese network Nippon TV joined the big list and the New York Times Company departed. Of the 48 media companies ranked both in 2008 and 2007, 28 either increased or maintained revenue.

“For the media conglomerates is not a normal economic crisis,” said IfM director Lutz Hachmeister, “explained by the savings rate of the advertising industry or consumer restraint. Rather, it is the coming technological change, economic upheaval and an identity crisis.”

If by “identity crisis” Herr Hachmeister means big media companies aren’t quite sure what business they’re in, he’s stating the obvious. The split between content producers and distributors is a widening trend; both, the stable ones at least, concentrating core strengths. Certainly, some publishers and some broadcasters are feeling the pain of new media and the “economic upheaval.”   But, too, being the biggest of the big media companies means changes come very slowly, a challenge as the next 50, 100 and 200 largest media companies can be far less stagnant.