Inspired brains never sleep
Febr.
04
Most of the developed markets within Western Europe are seeing either pricing deflation or very low rates of media inflation. In developed Europe, Spain forecasts the most dramatic decline in pricing expectations in the majority of measured media with the exception of Internet and TV, which is facing reduced inventory as the government eliminates advertising on public service Broadcaster RTVE. Most other countries, such as Belgium, Finland, Greece, Portugal, Sweden and the UK are seeing moderate price inflation or deflation not too far from general economic inflation expectations.
Within television, the most striking growth in pricing is in countries with the strongest economic growth potential such as Azerbaijian, South Africa and Turkey. The UK is one of few European markets forecasting deflation for TV in 2010. The UK TV market continues to face the Contract Rights Renewal (CRR) regulation, which deflates pricing on lead private broadcaster ITV and in turn acts as a benchmark for the overall market. Recent language out of Ofcom, UK’s communications industry regulator, suggests CRR may be relaxed or removed and the upcoming general election set to take place before June may bring a Conservative government to power, which would favor this scenario. Any change in the CRR mechanism is unlikely to take effect before 2011, when we forecast 3% inflation in TV.
their inventory structure, and many contractors culled their worst performing inventory in 2009. This reduced total outdoor inventory and further consolidation may yet occur (with CBS potentially selling its outdoor assets and JCD continuing its acquisition strategy), fueling the inflation predicted for 2010.
Spanish TV is undergoing dramatic change in Western Europe. At 10%, Spain’s TV inflation is expected to be the highest in Western Europe. In addition to the previously mentioned removal of PSB advertising, Telecinco’s acquisition of rival network Cuatro and Antena 3’s acquisition of La Sexta will significantly change the competitive landscape and concentrate price leadership in the hands of half the number of players vs. late 2009.
On average, European TV and Internet are expected to see the largest pricing increases in the next two years while pricing for other media is expected more or less to remain flat. Eastern Europe is mixed, with no clear trend happening across the overall region. While the Czech Republic and Latvia are expecting the highest rates of deflation across nearly all media, other markets such as Turkey and Serbia are expecting large price increases.
The only medium to see significant inflation in the UK is Outdoor, which is experiencing consolidation. In late January, JC Decaux announced it is acquiring Titan Outdoor’s UK assets. Though this particular deal is small, it strengthens JCD’s share in the transportation segment. In the Summer of 2009, Titan sold its roadside billboards to Prime Sight. In light of dramatic revenue declines, UK outdoor companies have been reviewing.
