H3G Group’s H1 2008 results showed static revenue and EBITDA slipping back into negative territory, neither of which bode well for the company’s target of being EBIT positive next year
H3G Group’s growth continued to slow in H2 2007, and it is now growing at just 6%, versus 10% 6 months ago, with falling ARPU combining with static subscriber net additions
Yell announced this week that full year sales growth (to March 2008) in its UK operations would be 2%, sharply down from the previously forecast 3%, due to “toughening market conditions” since the start of 2008
Rumours that Google was acquiring Yell emerged at the end of last week, but we doubt the search giant would be interested in purchasing a traditional media company, particularly not one predominantly in print
This note discusses the likely obstacles to a successful launch of H3G UK, the most aggressive 3G new entrant in Europe. Our main points:
What does this mean for the media industry? Does the increasing power of media buyers mean further downward pressure on rate cards? We suspect that many of the effects have already been felt, particularly in the European and US TV businesses. In fact, we see a different issue emerging: the explosion in advertising inventory in the last few years, which has resulted in a worldwide glut. This has coincided with what we think may be a permanent reduction in the absolute number of advertisers. As a result, media buyers will continue to obtain better terms, whether in buying as part of a large group or not, but media price deflation may be a feature of the industry for many years to come.