TELECOM Digest OnLine - Sorted: Media Industry 'Panic' Over Internet

Media Industry 'Panic' Over Internet

Adam Pasicki (reuters@telecom-digest.org)
Thu, 27 Oct 2005 10:24:57 -0500

By Adam Pasick

WPP Chief Executive Martin Sorrell warned on Thursday that many of the
world's leading media companies are on the verge of panic amid the
seismic shifts brought on by the Internet.

"There are major changes and we don't understand the speed and scale
at which they're taking place," the head of the world's second-largest
advertising and marketing company said at a conference held by the
Internet Advertising Bureau.

He described a media landscape in which traditional media such as
print and television are steadily losing ground to their new media
rivals.

"I think there's a certain amount of panic among media owners,"
Sorrell added. "Most of these companies, ours included I suppose, are
run by 50- or 60-year-olds who have trouble getting it, and who really
don't want to see change on their watch."

Sorrell singled out News Corp's recent Internet acquisition spree as
one sign that media conglomerates are scrambling to catch up.

"Rupert Murdoch, who I admire more than any other media executive
... has been willing to make (Internet) acquisitions almost
willy-nilly," Sorrell said.

After Murdoch convened a group of his top managers to plot a new
approach to the Internet earlier this year News Corp has spent about
$1.3 billion to buy MySpace.com owner Intermix Media, gaming Web
network IGN Entertainment, and online sports company Scout Media.

UK satellite broadcaster BSkyB -- 37 percent owned by News Corp and
with Murdoch as chairman and his son James as chief executive -- has
also agreed to buy broadband provider Easynet for 211 million pounds,
with an eye toward developing a hybrid broadband delivery platform.

Sorrell singled out newspapers, whose lucrative classified advertising
revenue streams are threatened by free Web sites like Craigslist, as
one of the most vulnerable businesses.

He also warned that prices for network television advertising, which
have been steadily climbing even as audiences decline, are not
sustainable.

"How can traditional media continue to charge more for less?" he said.

Copyright 2005 Reuters Limited.

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