Goldman Sachs is cutting its price targets on big media companies by 10%, based on an ad recession it thinks will show up later this summer.
“We believe that leading up to, and as companies report Q2 results in late July/early August, we will hear statements regarding a broader advertising slowdown, pressuring shares,” Goldman said.
Goldman predicts the slowdown will be fully underway in Q2 even as the TV networks report strong pricing increases in the Upfront. As we’ve pointed out before, higher ad rates won’t necessarily mean increased dollars, because the networks are selling fewer ratings points than last year. Goldman says news of a “strong” Upfront would be a good selling opportunity.
Goldman maintained its “buy” rating on Disney (DIS), “sell” on CBS (CBS), and “neutral” on Time Warner (TWX) and Viacom (VIA). It doesn’t have a rating for News Corp., whose CEO Rupert Murdoch has already said he feels “pessimistic” about the economy.