NEW YORK -- This year was already shaping up as one of the worst in recent memory for the media industry. Last week's terrorist attacks could make the outlook even worse.
Media outlets are already worried about the economy and advertisers, who have cut spending. They are also facing mounting costs from covering the national crisis, not to mention the lost advertising revenue from nearly a week of wall-to-wall news coverage.
News costs could grow even more once the U.S. military response gets under way.
"At this point, advertisers go into a trench where they wait to see what happens," said Jack Myers, chief economist of the media forecasting firm Myers Reports. "If we return to a sense of normalcy, so will advertising."
Just three weeks ago, Myers had lowered his forecast for overall advertising spending this year to a decline of as much as 6.6 percent. In a report to be released Wednesday, Myers said even that decline would be optimistic. "What was our worst-case scenario is now our best-case scenario," Myers said.
Christopher Dixon, a media analyst at UBS Warburg, estimated that $320 million in television advertising has been lost so far.
"The good news is that the networks are limping back to normal," Dixon said. "For most analysts 2001 was a write-off anyway. Most people are now looking to 2002, and it's too early to say what that could look like."
In the meantime, investors have pushed down shares in companies that rely on advertising. After taking a big fall Monday, companies such as Viacom, News Corp. and Walt Disney were off again Tuesday.
Other parts of the media world are also taking a hit.
Newspaper publishers, already struggling with a severe advertising downturn, are warning that the horrific events of last week are likely to affect profits.
Dow Jones&Co., The New York Times Co. and E.W. Scripps Co. have all warned of weaker third quarter results. The Times indefinitely postponed events commemorating its 150th anniversary, which had been scheduled for this past weekend.
Newsmagazines have also pulled out the stops on coverage of the attacks, putting out special issues with no advertising. Meanwhile, the all-news TV coverage of the past week has put off the start of the fall TV season, originally scheduled for this week, until next week.
TV news departments, never seen as profit centers for broadcasters in the first place, are now likely to require even more resources to cover the aftermath of the attacks as well as any retaliation by the United States.
Despite the financial hit, industry analysts said the media could see increased public confidence because of their willingness to set aside profit concerns to cover the news.
Copyright (c) 2001 Dow Jones & Company, Inc. All Rights Reserved