Nightmare on media street once again

Fears of a sustained consumer downturn have mingled with all the other negative financial news of the past few months to batter the ever-cyclical media sector.

Newspapers, traditionally the first sub-sector into recession, are fighting against not just a consumer downturn, but also a tougher advertising climate. Daily Mail & General Trust is close to its four-year low, while Trinity Mirror and Johnston Press are close to five-year lows.

Television companies are hardly faring any better, with some stocks being hit by the market’s negative reaction to their corporate structure and the general gloomy ad market (think SMG and ITV), while even such stalwarts as Pearson and BSkyB have been through the mill – although with the latter, this has a lot to do with its investment in ITV.

Over on AIM, the value of media companies has been falling consistently all year, with many smaller stocks seeing between 20 and 30 per cent wiped off their market caps – regardless of how well they have been trading.

Two prime examples are Ten Alps, the publishing and TV production group, and Electric Word, the niche sports and educational publisher.

Ten Alps recently reported interim results showing sales up almost 12 per cent to £37.6 million and earnings moving up to £2.3 million. It has cash of around £10 million but its shares are close to two-year lows and the business has a market cap of £26 million.

Electric Word’s progress these past few years has been impressive and its latest results showed turnover up 26 per cent to £13.5 million and adjusted profits up 41 per cent to £1.4 million. Its market cap languishes near a five-month low of £9.4 million.
There are many similar tales among AIM’s 113 other media ventures.