European media groups highlight sector pain

PARIS/FRANKFURT (Reuters) - Top European media groups have issued a raft of trading updates showing how the sector is being buffeted as economic slowdown hits advertising and makes the outlook more uncertain.

French media-to-aerospace group Lagardere posted a slump in sales at its print and broadcasting division, while publisher Bertelsmann and broadcaster RTL said the economic crisis in Europe could weigh on earnings.

TF1, France's biggest private broadcaster, said the fall in ad revenue at its main TF1 channel accelerated over the summer, falling 10.2 percent in the third quarter, against 5.9 percent in the first half.

Tuesday's comments were the latest sign of difficulties facing the sector, after other media and advertising groups such as Publicis, WPP and Omnicom cited economic headwinds as the main cause for declining advertising income.

ProSiebenSat.1, RTL's biggest competitor in Germany, last week reported a drop in German ad sales.

Bertelsmann, which also owns publishers Gruner + Jahr and Random House, previously said it saw a rise in net profit in 2012, but stopped short of repeating that outlook on Tuesday.

It said group profit would be impacted by special items in the print business and several direct-to-customer businesses, as well as from its operations in southern Europe.

"Also, the subdued economic outlook and the euro crisis make it difficult to predict our future performance at this point," it added.

TF1 confirmed full-year revenue would be flat because of "challenging economic conditions and intense competitive pressure" and also pointed to heightened price pressure over the summer.

At French group Lagardere, there was a 17 percent sales slump at Lagardere Active, the group's magazines and radio division, in the third quarter. The unit accounts for roughly a fifth of revenue and is the most sensitive to the advertising cycle.

AD REVENUE

Advertising revenue in the unit, which owns radio stations in France and Belgium, fell 8 percent, which was slightly worse than expected, CM-CIC analysts said in a note.

Strong book publishing sales, boosted by the launch of new titles such as J.K. Rowling's "The Casual Vacancy", helped offset the downturn at the Active division.

Lagardere, which competes with Pearson Plc and Bertelsmann in radio and book publishing, said it still expected its core 2012 media profit to be stable compared with 2011.

Third-quarter group revenue of 1.96 billion euros ($2.5 billion) compared with a forecast for 1.95-2.00 billion in a Reuters poll.

Lagardere had, in late August, predicted the second half of the year would be stronger than the first.

Bertelsmann said it still saw moderate revenue growth and high operating earnings before interest and tax (EBIT) for the full year.

Europe's largest media group, which said last month it would merge its publisher Random House with Pearson's Penguin, said revenue rose 5.7 percent to 11.4 billion euros over the first nine months of the year.

RTL said its TV advertising sales slightly increased in Germany, Europe's biggest economy, but said it still expected its 2012 operating profit to drop, citing an increasingly tough economic environment.

($1 = 0.7867 euro)

(Editing by Dan Lalor and David Holmes)

Source: http://news.yahoo.com/european-media-groups-highlight-sector-pain-184847583--finance.html

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