Looking over the precipice

Many B2C and B2B media sectors face challenging times ahead but interesting investment theses remain

• For the sake of simplicity, this deck uses the 2008-09 global economic recession as a start point to assess the potential impact of COVID-19 on B2C and B2B media sectors
• The impact of the 2008-09 recession on media overall was severe – media stocks were down c.55% and took 3 years to fully recover
• However, the 2008-09 proxy for recession may actually underestimate the scale and duration the potential recession resulting from COVID-19, even in case of the optimistic U-shaped recovery scenario
  • COVID-19 uniquely combines the challenge of social-distancing in the short term, along with the threat of contraction of the global economy
  • In addition, many media industries are going into this upcoming recession with less healthy balance sheets and weaker operational metrics
• Based on the latest scenario from the IMF, global GDP recovery from COVID-19 is estimated to stay c.2ppts behind the 2008-10 recovery trajectory and c.3ppts behind a no-recession growth scenario even in 2021
• Within media, the present headlines paint a challenging picture so far …
  • Ebiquity estimates adspend budgets will decrease by 16% in 2020 due to Covid-19
  • Numerous leading media companies have made public announcements about their recent financial challenges
  • Media share prices have dropped significantly and are down approximately ~30% so far
  • …But despite this overall macro context, there remains a series of interesting investment theses for potential investors within the B2C and B2B media space