Newspapers may be making a third less money than a year ago, TV stations may be losing out to multi-channel inventory and everyone may be struggling to convert web readers in to cash – but accounting firm Grant Thornton says everything’s improving…
The value of the firms on its Media Index of 100 market-listed media companies actually rose 33.5 percent during Q3 (July to September).
That’s the index’s biggest jump of the year, suggesting the cost-cutting and right-sizing many firms have undertaken since late last year may have satisfied investors, if not the hundreds of laid-off staff.
Grant Thornton says…
— “The majority (70 percent) of listed media companies were in positive territory in Q3 and media stocks outperformed the FTSE 100, (which saw an 18 percent growth in the period).”
— Though the Media Index dipped 18 percent in Q1 (January to March), it jumped back up by 20 percent in Q2 (April to June).
— That followed annual dives of 58 percent in 2007 and 46 percent in 2008.
Grant Thornton notes Yell, Trinity Mirror (LSE: TNI) and Johnston Press amongst those to have turned around their market valuation, following refinancing and restructuring plans: “may signal a re-bound to a more consistently positive sentiment for the media industry as a whole after over two years out of favour with the market.” (The index excludes FTSE 100 and Micro Cap companies).
We say: Company valuations may have flaoted back above the surface, but that’s only relative to the low water mark of the downturn and pre-downturn, and thanks mainly to those market-pleasing cuts. Companies still need to demonstrate a willingness to respond to the long-term structural change that looms over the industry.