Last year was one of the toughest ever for the 500 largest American companies – combined they lost over $500 billion — and media companies, unsurprisingly, are near the top of the list. Total U.S. advertising fell 4.1 percent last year, according to ZenithOptimedia, and since the majority of media companies make most of their revenue from advertising, it makes sense that three of the largest — Time Warner (NYSE: TWX), CBS (NYSE: CBS), and Gannett (NYSE: GCI) — made the top fifteen losers together, losing nearly $32 billion last year. Few media sectors were spared and most media companies took huge writedowns to assets they until recently viewed as far more valuable than they were worth. Highlights:
– Time Warner (#48; #9 biggest loser) lost $13.4 billion last year. Much of this was due to a $25 billion writedown of the media conglomerate’s cable, publishing (Fortune parent Time.Inc.) and online businesses. Warner Brothers held up fairly well; The Dark Knight in the theaters and Two and a Half Men on TV drove solid results from that division.
– CBS Corp. (#10 biggest loser; #186) lost $11.7 billion last year, almost all of it from writedowns of its TV station assets ($10 billion). The network scored points for beating out NBC, ABC, and FOX in total ratings, but advertisers are cooling on TV and with heavy programming and distribution costs weakening ad revenue turns into poor profits.
– Gannett (#371; #14 biggest loser) lost $6.6 billion in 2008. Like TV it costs a lot to produce and distribute a newspaper and since many have burdensome union requirements newspapers saw their profits plummet in 2008. Gannett’s $2.1 billion writedown of its UK newspaper assets and $4.4 billion writedown of its US newspaper assets didn’t help either.
So far 2009 doesn’t appear to be starting off any better. Many analysts believe Q109 could be worse for media companies than Q408. Gannett said its profit plunged nearly 60 percent in the first quarter and many point to similarly challenged results across most media companies.