Trouble under the hood

May 27, 2008 "Due to its lower advertising exposure to autos and financials and higher mix of more economically resilient advertising partners, we view 'buy'-rated Viacom as best positioned relative to peers," UBS analyst Michael Morris argued in the latest survey looking at how a sluggish U.S. economy will affect media and entertainment giants. Viacom management argued that its fast-food and consumer staples marketing partners are less likely to cut back on ad budgets in a possible recession, making the firm more recession-resistant despite a higher revenue percentage coming from ads than at other conglomerates. Across the media space, "autos represent a particularly high-risk business at 12% of total ad spend, with 0.6% consensus estimated revenue growth in 2008," Morris said, pointing out that News Corp. has four car advertisers among its list of top 10 marketing partners, CBS has three, and Disney and TW two each, while Viacom has none.

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