"Luck is an accident that happens to the competent." Albert M. Greenfield
"No man will be found in whose mind airy notions do not sometimes tyrannize him and thus force him to hope or fear beyond the limits of sober probability." Samuel Johnson
"True effort, in fact, as of a captive struggling to free himself: That is thought." Thomas Carlyle
Today's image: Surfacing by Catherine Jamieson. Beautiful. Thank you for sharing.
2008 ending soft, nobody is making their numbers
2009 looking tougher
- Deal flow will remain stagnant until sellers of media properties embrace the new reality of single digit multiples. Moreover, creative financing including seller paper will likely be needed to drive and close deals for cash/credit short buyers. Supply clearly exceeds demand.
- Characterizing the US economy as one in recession, or not, has become an academic exercise. No matter the term of art used there is an abundance of evidence suggesting a slowdown in consumer spending. When retail gets a cold, ad-supported measured media goes into the hospital.
- Competition for ad dollars will remain intense, increasingly an extreme sport. Failure to develop new business, at levels sufficient to be material, will exacerbate the consequences of an accelerated attrition in key account categories (e.g., durable goods, automotive).
- Pricing of broadcast inventories, especially those subject to traditions common in the transactional bid-ask, must reflect a new, more coherent value proposition. As a practical matter, broadcast operators need to be more mindful of what the dead tree guys are doing. Fighting for their survival print media are attempting to re-order how the ad-supported media game is played. [Hint: PPM provides radio with a robust reach story]
- Discretionary purchasing power will decline. As households tighten spending, accounts in the discretionary space will revisit and in the majority of cases will pull back on ad spend.
- Those with the courage and audacity to shift focus from market share to market creation will gain competitive and strategic advantage in the days ahead.
Pig on the runway: A scarcity of bank capital combined with a continuing poor state of economy seems likely to keep the pay radio pig from getting off the ground. The Mel Karmazin led XM/Sirius combo faced serious multiple challenges before last week's series of problems in the financial markets and now faces what may prove to be the most challenging task of all: Raising the capital needed to manage/refinance debt obligations while keeping the doors open long enough to reinvent the venture. The big issue appears to be the current pay radio business model. Will it support and sustain the enterprise following the realization of Mel's proposed $400+ mil in economies? My sense is the odds are 6 to 5 against the pay radio pig taking flight in 2009. The question being heard around midtown and downtown is will Mel attempt a reorg under protection of bankruptcy? [Related - Robert Holmes provides a very good review of the bidding @ TheStreet.com, Sirius XM Up to Its Ears in Debt, here]
Bonus: Chumby adds Pandora. Very cool. More info here.
Have an amazing week. Make something happen.