Disruption has been rearranging the media landscape in such a way that even seasoned observers need a scorecard. And that, thankfully, is what the analyst and media team headed by Standard & Poor's Heather Goodchild provides in a just-released report, "Structural Shifts Continue Across the U.S. Media & Entertainment Landscape."
The report not only offers outlooks for 20 media subsectors but groups them into four categories, from those that will suffer moderately or severely from disruption to those that may suffer only minimally or -- wait for this -- actually benefit from disruption. Highlights, presented with an appreciation for getting bad news out first, follow:
Directories -- Forget the dead trees. This subsector is being abandoned by once-loyal small businesses that, to survive, are cutting every cost they can.
Newspapers -- Just because this story's old doesn't mean it's over. Fewer readers still equals less ad share still equals downward spiral. "We expect this decline to continue for the foreseeable future and growth of newspaper online advertising revenue to be insufficient to offset the long-term decline in print advertising revenue."
Trade/B2B publishing -- This subsector of print-based publishing "has been exceptionally hard hit by market fragmentation, enhanced by the proliferation of more niche, focused, and regional online B2B communities."
Magazines -- A response other than discounting is needed to stave off secular declines in circulation and advertising. "The conversion to online-only delivery has proved to be a formidable and rarely successful task."
Local radio -- So what if listenership is holding up? Advertisers can reach this audience in different ways. "The industry must materially increase the effectiveness of its online and mobile strategies to maintain their advertising share and compete with Internet radio providers, such as Pandora."
Theaters--So begins the category with "moderate effects from disruption," wherein movie exhibitors compete with all sorts of video-enhancing technologies designed to keep consumers home. "We expect attendance declines in the low-single-digit range."
Film production -- This is about falling DVD sales, insufficiently counterbalanced by video-on-demand, Blu-ray and digital sources like Netflix Inc. "Electronic and physical piracy continue to increase, together with the proliferation of online entertainment alternatives and the widening availability of Internet-to-TV connectivity."
Broadcast networks -- If it weren't for recently negotiated reverse retransmission fees, this subsector would fare worse as participants "continue to lose market share to cable networks and online viewing, and face further competition from Internet-based on-demand TV."
TV production -- Expect pricing declines in network rerun syndication sales "due to the distribution of primetime shows via iTunes downloads or low-ad-generating sites like Hulu."
Local TV -- Stations are vulnerable to audience losses at their affiliated networks and other sources for local news.
Trade shows and exhibitions -- This subsector kicks off the group with "modest effects from disruption," benefiting, as it does, from the impossible-to-disintermediate desire of people to connect.
Hispanic TV -- Data from the 2010 Census has stirred "increasing competition for Hispanic TV audiences that is steadily fragmenting the total pool of Hispanic TV advertising."
Satellite direct-to-home -- Ample cash flows won't mask a potentially fatal disadvantage. "The lack of a triple-play bundle (consisting of video, high-speed data, and telephone services) exposes DTH operators to margin pressure, as video programming costs rise faster than their ability to raise prices."
Outdoor -- A solid intermediate outlook could succumb to "long-term pressure from overall media fragmentation and, potentially, mobile advertising. ... It is unlikely to return to the sustained high-single-digit percentage revenue growth it has historically enjoyed."
Cable networks -- Too many channels mean too much inventory. That said, audience erosion from over-the-top media still seems a distant threat.
Ad agencies -- They could be disintermediated as ad budgets go digital, but they don't have to be: "Tack-on acquisitions to build digital technology and service capabilities, as well as emerging market positions, will remain key growth strategies."
Now for disruption's beneficiaries, whose emergence is the source of all pain inflicted upon the others:
Cable systems--Can you say "broadband"?
Information/Professional publishers -- S&P, a part of this subsector, imbues it with "strong client retention, proprietary databases, and willingness to pursue technological innovation."
Internet search--Read: Google Inc., present beneficiary.
Internet display -- Read: Facebook Inc., future beneficiary.
Richard Morgan covers media for
The Deal magazine.