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THE market is preparing for a strong rebound in advertising...

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    THE market is preparing for a strong rebound in advertising markets this year, with some media companies expected to use the upcoming interim reporting season to upgrade earnings guidance.

    RBS Equities yesterday became one of the first broking houses to update its 2010 forecasts, tipping a 6.7 per cent rise in the overall advertising market for the six months of the year. Goldman Sachs JBWere and Deutsche Bank are expected to release their forecasts in the next two weeks. "We believe the pull-back in advertising spend in 2008-09 overshot the underlying economic fundamentals, and therefore expect a strong recovery as the ad market gets back in step with the broader economic environment," RBS analyst Fraser McLeish said yesterday.

    The total advertising market fell 10 per cent in the first half of last year, making it the largest six-month decline in advertising spend in Australian history.

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    However, demand picked up in the last three months of the year and the overall decline is expected to be about 8 per cent.

    "Given the scale of the downturn, we believe the bounce-back may be faster than many expect, and that this could lead to further upgrades to consensus earnings forecasts," Mr McLeish said.

    The media sector is up more than 113 per cent from its lows of March last year, outperforming the S&P/ASX 200, which is 55 per cent higher over the same period.

    While the current year is expected to be stronger -- against a very low 2009 base -- analysts warn that earnings will fall short of 2008 levels.

    This appears to have been confirmed by the recent negotiations between the television networks and the large media-buying agencies.

    Seven and Ten completed negotiations with agencies over ad rates for 2010 in December. There was speculation Nine was lagging its rivals but the network says its negotiations with the agencies were finalised at about the same time.

    The figures are often disputed among the networks and some agencies, but Ten is believed to have secured a 4-5 per cent ad rate increase, Seven a 2-3 per cent rise and Nine a 1-2 per cent rise.

    http://www.theaustralian.com.au/business/signs-of-a-rebound-in-advertising-spending/story-e6frg8zx-1225821388389



 
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