Covid-19 bad news for most media

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A comprehensive report from investment bank Berenberg, which examines media and media-related activity affected by the Coronavirus, says that it expects key events to still be cancelled going into Q4 this year.

“By and large the pandemic is not a positive for our sector,” says the bank. The report admits its forecasts might well be wrong but says it has done the best it can with available data. “Advertising will clearly be affected by the economic impact of the virus and the cost of the measures taken to deal with it. We estimate mid-teens downgrades for TV advertising revenues in all markets.”

“Events will be cancelled until Q4, we think: Meanwhile, we also take standardised assumptions for the events businesses. Large gatherings are highly unlikely to be authorised until after the summer, in our view, although a few small ones may take place in China in the next few months (the bellwether here, Canton Fair, has been postponed from April). There are direct costs that can be saved, but we think that events businesses will do little more than break even in 2020. In 2021 we assume a normal schedule of events, but with reduced spending given the economic impact of what is happening globally,” says the report.

“Gaming is a clear winner: The good news is that after a fairly torrid 2018 and 2019, the gaming sector is having its day in the sun. More consumers are staying at home, driving unprecedented levels of engagement with games. The obvious question is whether that can be monetised: in the case of television, there is more viewing but there is not more advertising revenue as a result.”

The bank names Ubisoft, Electronic Arts and Activisioin Blizzard as having “further to run”.

However, while the bank agrees that TV viewing will increase it is not likely to benefit from increased ad-spending. “As far as the broadcasters are concerned, while we want to take advantage of the huge decline in share prices, these are exceptionally operationally geared companies, and all face structural change as well. We downgrade ProSiebenSat.1 and Mediaset to Hold, as we do not have the stomach to take that level of risk at present,” says the bank.

The report is also generally positive about the satellite sector, saying that with multi-year contracts in video and in the data business, the satellite infrastructure providers ought to be pretty defensive. “However, it is in the exposure to the mobility segment that we see the soft underbelly.”


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