UAE media hit by triple whammy
Posted on 16 July 2009 with no comments from readers
The once prosperous UAE media sector is being hit from three directions this summer: a collapsing market for advertising, late payments and less news to report. Each problem would be a major issue, combined they are storing up trouble for the not-too-distant future.
It is impossible to get accurate figures for media billings in the UAE but talking to publishers a 20-50 per cent fall in revenues across the board seems a reasonable estimate for 2009 so far, with television least affected and magazines the most.
Big cost-bases
For companies that have big head counts and cost-bases designed for the boom times of 2008 this is clearly a very difficult situation, and many staff have already lost their jobs.
The advertising downturn is compounded by late payments now totaling $123 million, according to local agencies. Not earning much in 2009 is one thing, not being paid for what has been earned is another.
And it is not as though an immediate bounce back to recovery is in prospect. The global economic crisis has laid another layer of gloom on top of a local cyclical downturn in real estate and construction. Oil prices have recovered this year but so far that has had little impact on local business spending on advertising.
Real estate advertising has virtually dried up but then even airlines, banks and car manufacturers are spending far less.
At the same time there is just less news to report as there is less happening in the UAE, and it has to be said reading about constant gloom-and-doom does get depressing after a while. But if people are not reading or listening any more this hardly helps the media sector to sell advertising.
What next?
What will happen next? Clearly those companies that are spending as though nothing has occurred are going to face a day of reckoning and wish that they had been more careful about guarding their cash.
That could mean mergers and consolidation. It also probably means that some media concerns will be forced out of the market altogether.
There is simply not enough advertising revenue to support the existing UAE media, and only the financially-strong and, or government-backed are likely to survive to thrive in the recovery. That day will come but it could be too far out to keep everybody afloat waiting for it to arrive.
