Media eyes some light in dark times

NEW YORK (Reuters) - For the media business, slightly down may be the new up, to paraphrase entertainment veteran Strauss Zelnick.

At the Reuters Media Summit, executives tried to put their best spin on an industry that is facing deteriorating consumer confidence and diminishing economic prospects.

Sales of video games over Black Friday, the start of the U.S. holiday shopping period after Thanksgiving, appear to be better than many had forecast, but industry executives said that did not necessarily guarantee robust sales through December.

"It was better than expectations, but it's pretty hard these days -- being slightly down is the new up," said Strauss Zelnick, executive chairman of Take Two Interactive Software Inc (TTWO.O), publisher of the blockbuster "Grand Theft Auto" game series.

Microsoft Corp (MSFT.O) was similarly tempered in tone, even as Black Friday weekend sales of its XBox 360 game console broke records and rose 25 percent from a year ago.

"We're still cautiously optimistic as we enter full bore into the holiday season," said Shane Kim, vice president of strategy and business development for Microsoft' interactive entertainment business.

"Who knows, maybe flat performance will be considered a remarkable achievement," Kim said, when asked about his view of the game industry in 2009.

The financial crisis has hit the shares of most media and entertainment companies, from leading movie rental chain Blockbuster Inc (BBI.N) to satellite radio company Sirius XM Radio Inc (SIRI.O) to concert promoter Live Nation Inc (LYV.N).

"We expect next year to hold its own," Live Nation Chief Executive Michael Rapino said, pointing to ticket sales for early 2009 still showing no impact from the recession. But he added, "I'm not going to predict a boom."

CHANGES IN MEDIA

Advertising executives said the recession will speed up evolutionary changes underway in television, newspapers, movies and gaming as people increasingly turn to the Web for free entertainment.

Steve Lanzano, chief operating officer of French advertising group Havas SA's (EURC.PA) MPG North America, projected U.S. advertising spending to fall 5 percent to 8 percent in 2009, the steepest decline in eight years.

In this climate, he said Web search advertising would hold up better than others as its impact on consumers is easier to track, making it popular with marketers with tight budgets.

"Search will continue to grow and I think it will grow probably 9, 10 percent. Search will continue to bloom in the marketplace," Lanzano said.

MySpace CEO Chris DeWolfe told Reuters that its wildly popular online social network owned by News Corp NWSa.N can boost ad revenue in 2009 despite the recession.

"We see a lot of companies switching dollars from offline media to online media, which is good for us," he said.

For now, however, online advertising remains a modest though fast-growing segment of overall advertising. As evident from past downturns, people are still seeking comfort in movies in theaters and on DVDs, executives said.

"It is still the most affordable out-of-home entertainment option," said Mike Campbell, CEO of Regal Entertainment Group (RGC.N), the largest U.S. cinema chain. He said his company is on its way to delivering a "great quarter" and "it's been business as usual for us."

Blockbuster CEO Jim Keyes said the same held true for DVD rentals, though the company will launch a 99 cent DVD rental program in January to lure cash-strapped consumers.

"We don't think the economy has had any adverse effect on Blockbuster," Keyes said. "Entertainment we think will do well during this time."

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Sue Zeidler, editing by Tiffany Wu and Derek Caney)