News from AAP

Media shares slump on weak advertising revenues

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Fairfax Media shares hit a record low on Wednesday as the latest falls in consumer spending foreshadowed continuing weak advertising revenues for media companies.

Fairfax, publisher of The Sydney Morning Herald and The Age, hit an intraday low of 84 cents a share, its lowest price since relisting in 1992.

News Corp shares fell back to their recent lows caused by the fallout from July’s News Of The World phone hacking scandal.

Seven West Media, owner of the Seven Network and The West Australian newspaper, hit a new low for the year.

Ten Network also lost over four per cent in value.

The wider market lost more than two per cent on Wednesday, primarily due to investor concerns about the health of the economy sparked by further falls in consumer spending in Australia and the United States.

While retailers are directly affected by weak consumer spending, it also has a significant effect on revenues in the media sector, Fat Prophets senior industrial analyst Greg Fraser said.

“The retail sector is one of the largest advertisers,” Mr Fraser told AAP.

“Harvey Norman, Woolworths and Coles are well up in the upper echelons in the buyers of all platforms of media spending.

“So anything that affects retail spending certainly flows through to media advertising expenditure.”

Australian Bureau of Statistics figures on Wednesday showed retail spending fell 0.1 per cent in June, well below economists’ expectations of a 0.4 per cent rise.

In the US, data showed American consumers cut their spending in June for the first time in nearly two years.

Personal savings in Australia and the US are rising due to increasing consumer caution caused by economic and financial market uncertainty.

Fairfax shares closed at 86 cents, down 3.9 per cent on the day, and down 39 per cent for 2011.

News Corp lost 3.1 per cent to close at $14.57 and its non-voting scrip shed 3.2 per cent to $14.12.

Seven West Media dropped 3.6 per cent to close at $3.46, Ten lost 4.2 per cent to close at $1.04, and broadcaster Southern Cross Media dropped 3.5 per cent to $1.37.

Among other media stocks, regional pay television provider Austar dropped 1.4 per cent to close at $1.035, regional newspaper publisher APN News & Media lost 2.3 per cent to close at $1.05 and Consolidated Media Holdings fell by 1.3 per cent to close at $2.35.