Media stocks dive as NYSE re-opens

Broadcasters are likely to feel the commercial brunt of last week's

tragic events in the US after a disintegration in ad revenue pushed

worldwide media stocks toward their lowest levels for five years.

Media owners lost millions of pounds in revenue in the eight days after

the atrocities in Washington and New York as television ad breaks were

scrapped and newspaper pages cleared of ads to provide blanket coverage

of the events.

Now the loss of advertising from those sectors most closely affected,

together with the shattering effects on consumer confidence and retail

spending as the public blockade themselves in front of their TV screens,

are threatening to push the media industry into recession.

Lorna Tilbian, a media analyst at Numis, said: "It feels exactly like

1990, when adspend was falling and the wider economy seemed to stay

intact - then the Gulf War and the Gorbachev coup tipped us into

recession. Had we not had the World Trade Centre it might have delayed

the day of reckoning, but it would still have happened."

WPP's share price dropped 35.5 per cent to 558.5p on the day following

the attacks and yesterday fell another 3.84 per cent to 513.98p. In the

US, Interpublic's price fell 8.17 per cent to $23.05 after

re-opening on Monday. Yesterday Omnicom's share price fell 3.076 per

cent to $64.6.

Viacom, the US media conglomerate that owns CBS and MTV, yesterday

released a severe profit warning, ruling out the double-digit growth for

the year that it had predicted in July.

"Some advertisers believe their campaigns are inappropriate and are

working to revise their forecasts," Viacom's president and chief

operating officer, Mel Karmazin, said.

Catastrophic falls in the share price of UK commercial broadcasters have

paralleled the effects on their US counterparts. Shares in Granada fell

10 per cent to 91.5p, their lowest level since 1993. Carlton shares

dropped 17 per cent to 178p.

A note released by the City analyst Merrill Lynch on Tuesday said that

broadcasters are likely to suffer worst from the short-term effects of

last week. The statement also argued that newspapers will benefit from

the mitigating circumstances of dramatically increased circulation.

Merrill Lynch remained neutral on the outlook for ad agencies but

pointed out that the suspension and delay of campaigns will exacerbate

the recessionary influences operating before last Tuesday.

The immediate effects of share price declines may be felt in the

takeover battle for Tempus Group, the share price for which fell from

565p the day following the disaster to about 552p yesterday. Against

this background, WPP moved to increase its stake in the group from 22

per cent to 26 per cent.