Broadcast Vendors Join Economic Slowdown

Trade group cites weak sales growth, declining profits.

Technology vendors to the broadcast and media industries aren’t immune to the downturn in the global economy, according to new research from the International Association of Broadcast Manufacturer, which represents more than 270 vendors worldwide.

The IABM says that its Industry Index, which tracks year-on-year change in overall sales and profitability for the broadcast manufacturing and media technology sector worldwide by examining the latest reported financial data from 66 companies in North America and Europe, is indicating a downturn in the sector after several years of strong sales growth and profit performance.

Companies analyzed in the IABM’s latest report had sales turnover in the last 12 months of over $10.3 billion, an 11.9% increase compared to the previous year. But IABM says that the rate of increase appears to have peaked, and while 74% of the reporting companies are still profitable, an increasing percentage of companies are moving into the loss column. The aggregate profit to sales ratio, which currently stands at 11.7%, is also declining, says IABM.

“The cyclical peak rate of sales growth seen in both October 2006 and October 2007 has hardly happened at all this year,” said IABM Chief Executive Officer Roger Stanwell in a statement. “There is now an indication of the start of a decline in the long-term value of this Index, for both North American and European companies.”

Profitability has still improved, says IABM, but by only 9.3% year-on-year. That is the lowest increase since the Index tracking started three years ago. Profit growth in Europe, in fact, has turned negative, declining 1% over the past 12 months. 

By comparison, an IABM report on the index released before last April’s NAB convention showed global sales increasing by 11.4% year-on-year, while a report from last December showed annual sales growth of around 14%. The April report showed the profit-to-sales ratio at 7%, with 80% of the companies in the index reporting profitability.