By: E&P Staff Three major trends surfaced during this week's Mid-Year Media Review in Manhattan: Ad revenue growth is inconsistent, help-wanted is on the rise, and cost pressures are proving manageable, according to a report released by Goldman Sachs.
The investment firm said that many investors walked away from the conference "with a slightly more cautious view of the near-term industry outlook," due mainly to a lack of consistent ad revenue growth.
The culprit: Retail ad revenue, which accounts for roughly 47% of total ad revenue, is still in the gutter. Not helping matters is that national ad revenue growth, which accounts for 17% of the total, is fickle. These two categories are muting the skyward growth of help wanted classified revenues (which represents 36% of the total).
Goldman Sachs predicts that for Q2, ad revenues will increase 5% to 6%. Expect Knight Ridder and The New York Times Co. to be on the low end. Gannett Co. and McClatchy will most like outperform the industry.
The firm forecasts that help wanted will be up in the 10%-15% range for Q2 (versus 3.9% growth in Q1).
As for the cost-cutting measures that have taken place in the industry in response to a slow ad recovery, Goldman Sachs "applaud(s) this discipline" but warns that "earnings upside is still dependent on accelerating revenue growth, rather than further cost reductions."
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