Welcome to 2002, a better ad year

Welcome to 2002,
a better ad year

By how much? When? For whom? Muse with us.

By Gene Ely

    The media industry slid across the finish line of 2001 on its chin, gasping through a cruel December, its nose fresh with blood from the tragedies of Sept. 11.
    There are now many who advise that the crawl is not over, and by some months. Fashionable thinking these days says that the ad economy won't be recovering until mid-2002, and that's if things go well.
    We at Media Life, being contrarians, think otherwise. We think the media economy will come back sooner.
    We believe the recovery has already begun, and we base this belief not on forecasts of noted media economists but on what we are hearing on the street. Some monthly magazines, to cite one example, are already reporting strong ad sales for their March issues.
    We are basing our belief on reports of key indications for the economy at large, such as new home construction and the steady recovery of the stock market over recent months, with the Dow Jones Industrial Average ascending to its long-held perch above 10,000.
    Recessions tend to run a year, and come March this recession will be a year old and ready to step aside.
    We also detect a mood in America of wanting to get on with life, to put tragedy behind us and to rebuild the lives we all left behind so abruptly that day in early September when commercial airlines captured by terrorists crashed into the World Trade Center and the Pentagon. We see this in all the mood-of-the-nation studies from researchers and we also feel it in our bones.
    The more interesting question is not when will the economy come back but for whom?
    Economics is in some sense the dismal science of picking those who will survive from those who will not when markets begin behaving like bungee cords.
    A logical fallacy of much economic forecasting is that when markets recover they do so in lock step, with all players seeing a return of business to prior or almost-prior levels.
    In reality, in the aftermath of downturns only some longstanding players return. Many keep flailing, the bungee effect losing none of its force and often gaining, until the whole enterprise flies apart.
    The economic value of recessions is precisely that they serve to clear out the companies that have continued to exist long after extinction was in order, at the expense of newer companies with brighter ideas and far better reasons to live.
    The true nature of recession and recovery is the rightful redistribution of market share to the leaders of the new marketplace that is emerging.
    This recession was long overdue to clear out excesses in the economy that date back a decade. Much of that clearing out has already taken place, as we have seen with the collapse of the dot.com boom that began in the fourth quarter of 2000.
   But more clearing out is due in the coming year, and the flying debris may well confuse people into thinking that the recovery is still some way off. It will be ongoing, if less noticed because of the flying debris.
    In this first week of the new year, it is already clear that 2002 will be a year of breakups and new beginnings.
   In magazines, two major publishing houses, Ziff and Primedia, will struggle to hold themselves together.
    In television, the great partnership at Viacom of Sumner Redstone and Mel Karmazin is fraying and not expected to last. If Karmazin leaves, the future and direction of CBS will be thrown into doubt.
    Also in doubt is the fate of ABC, whose parent Disney is thought to be a takeover target for the cable giant AT&T Comcast, once that merger is approved. Disney stock took a serious tumble last year, losing almost a third of its value and leaving the company vulnerable to a takeover.
    Such a takeover would require regulatory approval, but analysts widely believe that the ban against a company owning cable and stations in the same market will be lifted.
    These are the stories Media Life will be reporting on through the year as we attempt to discern the shape of the new media marketplace that is emerging.

-Gene Ely is the editor and publisher of Media Life.

Printer-Friendly Version | Send to a Friend
Cover Page | Contact Us