The dramatic decline in media advertising spending in Europe over the past three quarters is easing, although it will be a long time before the sector recovers, according to a new study.
The Fitch Ratings study suggests that it will be several years before media spending reaches the levels seen in 2007 and early 2008.
Following very steep declines in advertising revenues at the end of last year and into 2009, Fitch said there is increasing evidence that some sort of trough may have been reached, with a moderation in year-on-year declines.
It predicts that the remainder of this year and 2010 will see further pressure on media firms with no real revenue growth expected until 2011. However, its review of the results of Europe's major media players for the first half of 2009 leads it to conclude that while advertising-dependent media companies show a starkly worse performance than a year ago, most are noting a degree of stabilisation in the market.
"The tone of many companies' results is somewhat more optimistic than it was six months ago, suggesting they are more in control, albeit with vastly reduced expectations," said Alex Griffiths, senior director in Fitch's TMT team in London.
All the advertising reliant companies in Fitch's portfolio have proactively adjusted their cost bases, and the combination of these cuts feeding through to results, and what looks like the bottoming out of the advertising market, is leading to a more confident tone," he added.
Fitch said it expects free-to-air television to be the area that will be most likely to witness a reasonable recovery, while consumer print media will face considerably more challenges in bouncing back.
The agency said that the move of advertising away from traditional media and on to the internet is set to continue, with online advertising set to account for 16 per cent of total ad spend by 2011, compared with 12.7 per cent last year.
