Ad recession is coming

Or so says Henry Blodget writing in Silicon Valley Insider - and quite at odds with the Pollyanna forecast of media honchos like News Corp.'s Peter Chernin and CBS's Les Moonves. "Let me be very clear - we are seeing no signs of a slowdown anywhere in our business," Chernin said at Citi's big media and entertainment conference this week. Of course as Blodget explains, they wouldn't be seeing any signs of a slowdown - not yet anyway. Advertising cuts typically lag the first signs of a recession - often by six months or more.

This is certainly what happened in the last recession (although for some sectors, the falloff happened even faster). The first signs of a slowdown appeared during the summer of 2000--similar to the current situation. Newspaper advertising--to pick a then-healthy media business--was coming off strong year and a solid Q4, but in Q1 of 2001, when the contraction officially started, it promptly plummeted 4%. Even though the contraction officially ended after 8 months, moreover, (per NBER) newspaper advertising continued to decline until nearly a year later, in Q2 2002. This will be important to remember as we go through the period where everyone starts trying to call the bottom.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
The multi-talented Mark Lacter
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