LONDON (Reuters) - British media companies could cut tens of thousands more jobs in the coming years as the economic downturn hits an industry already ravaged by the Internet revolution.
British newspaper groups and broadcasters have announced a host of cuts in recent weeks as the downturn in advertising caused by wider economic problems eats into revenues.
But analysts believe this is just the latest wave from the troubled industry, and that worse is to come. They expect stabilization in the advertising industry by 2010 and not a proper recovery until the London Olympic Games in 2012.
Claire Enders, founder of independent consultancy group Enders Analysis, told Reuters she expected about half of all UK media jobs to go by 2013 under current economic conditions.
“We calculated the total jobs in the media in the UK at about 400,000, that includes newspapers, radio, TV, production companies, advertising and so on, at the end of 2007.
“Between the beginning of 2008 and 2013 we’re expecting half of those jobs to go. The big employers are the regional press, magazines, local advertising sales. Real numbers are in print.”
The index for Britain’s media groups in the FTSE 350 is down 40 percent already this year, with even the most resilient groups plunging from previous highs.
“In terms of the really tough trading we’ve only had two months, maybe three,” Numis analyst Paul Richards told Reuters.
Those groups which rely on subscription revenues such as pay-TV firm BSkyB, Virgin Media, and professional and business to business publishers are seen as the most resilient.
But those which rely on advertising such as the biggest commercial broadcaster ITV, radio and newspapers groups are facing a sustained downturn after a surprisingly solid first half, analysts said.
Senior Screen Digest analyst Vincent Letang said he did not expect a quick recovery after the “brutal” downturn.
“I see a long slowdown before a potential recovery in 2012. Newspapers are in a longterm irreversible decline and it’s only the beginning for them. It’s a brutal slowdown.
“I don’t expect following that period of crisis we’ll have a strong rebound as we had after the dot com crash.”
Print advertising has been hurt in the last year by the rapid decline in property, employment and other sectors and by the move from classified adverts to the Internet, which has particularly hurt regional papers.
Regional newspaper group Johnston Press said in November it had seen a near 50 percent fall in property adverts and had cut 12 percent of its workforce since the start of 2008.
Daily Mail & General Trust, which publishes regional papers as well as the Daily Mail and London’s Evening Standard, said some 400 people had already left. The Independent newspaper said Friday it would cut costs further by moving in with the Daily Mail and sharing back office services.
The Trinity Mirror Group, which publishes the Daily Mirror newspaper, has cut hundreds of jobs in recent years although many have come from improvements in technology.
ITV announced 1,000 job cuts in September and Virgin Media is to reduce its workforce by around 2,200 by 2012.
Steven Barnett, Professor of Communications at the University of Westminster, said the newspapers most likely to survive would be those that continued to invest in quality journalism.
“I’m quite convinced we haven’t seen the end of job losses,” he said.
Editing by David Cowell