Ad spending has stopped falling in at least one corner of the media business. Richard Bressler, managing director at private equity firm Thomas H. Lee Partners, which counts Nielsen Co. and Univision among its assets said today, "In our portfolio of companies, we've seen that it's tough out there, that's no surprise, but for the last month or so, it hasn't gotten worse. That doesn't mean it isn't still bad, and it's still down year on year. It appears to have stabilized, but it could be a false bottom."
Bressler spoke on a panel of industry strategists who expounded on the financial issues surrounding media and technology at the McGraw-Hill media summit today. Another participant Jonathan Miller, former chief of Time Warner's AOL and now co-founder of venture capital firm, Velocity Investment Group, said he still believed there would be consolidation among the big digital players in order to challenge Google's pre-eminence in search. "There has to be consolidation among the big players online, because no-one can compete with Google on their own." Miller had previously been rumored as a possible new chief at Yahoo.
Miller described the evolution of the media conglomerate saying they'll look a lot different in years to come. Where once big media comprised film, TV and print, "I'm not sure that's going to continue to hold. I think we're seeing new theories...It may be the new companies who may be doing the acquiring of the future. It will be interesting to see if it starts from the other end," he said. Miller made the case for why marketers should launch brands via the Web and then move to big media buys on traditional media, once they had found a natural community of loyal customers. He predicted more money would move to the Web as media budgets eventually moved in sync with where viewers spend their time.
Miller suggested that today there is "something of a pregnant pause," while people wait and see how the landscape shakes out. "People are waiting for a catalyst. It might have to be the government." He said few people wanted to get into businesses unless they could see where the exits were. For new companies the days of several rounds of funding were over. He said venture capital firms wanted to see break-even after one or two rounds of financing.
When things do return to whatever the new normal looks like, there will be a lot of money looking for deals. Imran Kahn, managing director at J.P. Morgan, also on the panel, added: "A lot of these companies are sitting on $76 billion in cash. At some point mergers & acquisitions will come back."
Thomas H. Lee's Bressler said his company would be looking to take advantaged of distressed companies to augment the firm's portfolio. Panelist, Robert Raciti, Senior-VP industry strategist at GE Capital Media concluded: "I truly believe [the market] is going to come back...We are going to see some opportunities that we've only seen a few times in our careers."