IAB/PwC released figures for 2008 showing that annual spending on internet advertising rose 19.1% to £3.35 billion, accounting for close to 20% of total UK advertising, far higher than in any other major market

The recession started to bite in H2 2008. As budgets are cut, display has been hit harder than search and classified, as a rising share of inventory (almost 50%) is sold by ad networks for discounted CPMs or on a performance-basis

Our revised forecast for internet advertising is for zero growth in 2009, with a low single digit rise in paid search offset by falls in display and classified

UK Digital TV (DTV) growth has finally started to slow significantly. By the end of 2008, 86% of TV homes and 91% of the population living in TV homes had DTV reception on one or more sets

Almost the only growth now is coming from the satellite sector, as Freeview digital terrestrial TV (DTT) reception reaches its upper limit prior to the full commencement of digital switchover (DSO) in spring 2009. This will see the digital technical household coverage of the main PSB channels extend from 80% to 98.5% by the completion of DSO in 2012. These forecasts update our previous forecasts issued in June 2008 (see UK DTV Homes to 2017 June update [2008-62])

Highlighting the challenges of the ad-supported digital music model, SpiralFrog, the first licensed service to launch in the US, collapsed recently in a sea of red ink and failed promises

Newly licensed ‘cloud’ jukeboxes like Spotify or We7 are struggling to make sense of the ad-supported model whose licensing costs far outweigh their potential revenue at present

Digital Britain’s proposed Digital Rights Agency could improve the licensing environment for cloud jukeboxes, but we expect copyright owners will take particular care to avoid substitution of music consumption from pay-for to ‘free’ (but ad-supported), unless the financial rewards are commensurate

Google’s announcement that it will offer ‘interest-based’ advertising to key partners on YouTube and its AdSense publisher network from next month, with a wider rollout later this year, raises the ante for behavioural targeting

Targeting based on users’ activity on publisher websites has become widespread, but concerns over privacy have slowed deployment of technologies that track users’ entire click-stream activity on the internet, such as Phorm

Exponents believe that behavioural targeting will boost the market for internet display, which we estimate was worth £650 million in 2008. In our view, its main impact will be to accelerate the shift to performance-based pricing

This report updates our ongoing coverage of the UK commercial radio sector (UK Commercial Radio Q2 2008 [2008-84]), and includes our latest revenue forecasts for the period 2009-2013 (Table 1)

In the context of a UK recession that is proving to be deeper and longer than official forecasts had anticipated in 2008, we have severely downgraded our advertising forecasts. We now anticipate that, following the 6.4% decline in 2008 to £560.2 million, commercial radio advertising revenues will decline by a further 14.6% in 2009, to £478.2 million (compared to the peak of £641 million reached in 2004)

Johnston Press results for 2008 (calendar year) all too eloquently illustrate accelerating local media advertising decline, with property advertising down 10% in Q1 and 55% in Q4

Write-downs have forced Johnston to record losses of £429 million in the year and there is a very real threat that the publisher will breach its borrowing covenants in June 2009, or by the end of the year

While digital is highlighted as the only growth area for the group, we remain concerned that many local publishers are effectively accelerating their own decline by ‘doing too much too well’ in terms of digital news provision at the expense of the quality of their newspapers

Vivendi’s Canal+ Group overshot its 2008 EBITA target, despite sluggish subscription growth, delivering to shareholders some of the promised post-merger gains from “synergies” with TPS

For 2009, Vivendi has issued cautious revenue and EBITA guidance that, on current trends, will easily be met. However, management has now recognised that initial targets for 2010 will be “hard to reach” – as we have already warned

In the medium term, a further downside risk for Canal+ Group is the likely loss of exclusivity for the distribution of themed channels, which could be the outcome of the anti-trust investigation of CanalSat, with a ruling expected in 2009

ITV has switched from a turnaround to a survival strategy focused on preserving its core broadcast and content production business. The switch comes against a backdrop of plunging total TV NAR (net advertising revenues) due to the devastating mix of severe recession and major structural decline in the TV advertising medium

ITV plans to cut programme budgets outside regional news by £65 million in 2009 versus 2008 and rising to £135 million by 2011, raising the spectre of a downward spiral in programme budgets, audiences and NAR

We expect the eventual programme budget cuts to be at least double those already planned, given the scale of the unprecedented advertising crisis. Despite this, ITV may just squeeze through without getting sucked into the spiral, but it will be close

VMed’s Q4 results were mixed, with consumer cable revenue remaining stable but cable net adds dropping significantly and opex performance hit by rising energy costs

Group OCF was stable thanks to improvements at Virgin Mobile and Content

We expect performance to prove relatively resilient in 2009, though not to the extent of generating significant growth in underlying annual cash flow

Project Canvas is the BBC/ITV/BT backed proposal for next generation Freeview and Freesat services that embraces IPTV reception, new EPG, home storage and HDTV applications

Setting up Canvas as a not-for-profit consortium and making it non-exclusive to content providers should avoid the competition issues which killed Kangaroo, but many questions remain and technical and regulatory delays could push back the launch to 2011

We do not expect Canvas to make a major difference to non-linear viewing of audiovisual content – its importance lies much more in future-proofing the ‘Free TV’ viewing experience on the terrestrial and satellite platforms