By Madeleine King
The outlook for the European media issuers could not be more different. We can divide the
sector into three distinct categories: the ‘Good’ (Reed Elsevier, SES, Vivendi) will be relatively
unscathed by the downturn; the ‘Bad’ (most media issuers) will have a fairly tough 2009, without
significantly compromising credit quality; and the ‘Ugly‘ (ITV, DMGT) will suffer aggressive
earnings declines, cash outflows and leverage increases in our view.
The ‘Ugly’ and some of the ‘Bad’ already trade fairly wide, but nonetheless we cannot justify
taking exposure to most of these names at this stage in the cycle. We are even reluctant to
take exposure to the names that we like fundamentally at this point in time since most have a
funding requirement in 2009. We therefore recommend an Underweight position in Media
across Euros, Sterling and CDS.
Disclosures and Disclaimer This report must be read with the disclosures and analyst
certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it

Summary
The outlook for the European media issuers could not be more
different. We expect some names to be relatively unscathed by the
economic downturn, while for other issuers we see potential for
double-digit profitability declines and significant cash outflows. Some
of the most cyclical media names already trade wide, but we
struggle to justify taking exposure at this stage in the cycle. We are
even reluctant to buy some names that we like fundamentally at this
point, because of their high 2009 funding requirements. Overall, we
recommend an Underweight across Euros, Sterling and CDS.

Fundamentally mixed
Bleak advertising backdrop…: We expect significant declines across Western European and North
American advertising markets in 2009. The consensus is for some improvement in 2010, but even if this
is the case, on an absolute basis we are unlikely to see a full recovery before 2011. We expect the most
cyclical, highly advertising-exposed media issuers to report severe earnings declines in 2009, with
performances likely to remain depressed thereafter.
…But not everyone is exposed: Not all media issuers generate revenues from advertising, and some subsectors
are likely to perform much more strongly in 2009. We believe most areas of professional publishing
will deliver a solid performance this year, as will the much more resilient satellite/ telecoms segments.

Mixed outlook for balance sheets: In many cases, we expect cash flows to be fairly resilient – cushioned
by potential reductions in shareholder returns – which should allow for stable to improving leverage in
2009. But for the most cyclical issuers we believe that even full dividend cuts may not be enough to
preserve balance sheets. We believe some acquisitions may be on the agenda for the more stable names in
2009, but overall we expect M&A be much more subdued, following a fairly active 2008.
Technically challenged
Liquidity a little stretched in some cases: 2009 bond redemptions have been pre-funded in all but a few
cases, but several M&A facilities have yet to be re-financed. We predict an unusually high EUR6.5bn
equivalent of media bond issuance in 2009 (EUR2.6bn YTD), led by SES, Reed Elsevier, Vivendi and WPP.
Underweight across euros, sterling and CDS
Our strategy view is that credit offers value as an asset class, particularly in cash, but that investors will
need to take a medium-term view on investments because technicals will continue to drive spreads in the
near term. Many of the most cyclical media names already trade fairly wide, but nonetheless we cannot
justify taking exposure to most of these issuers at this stage in the cycle. We are even reluctant at this
point to take exposure to many names that we like fundamentally, since they have a funding requirement
going into 2009. We therefore recommend an Underweight in Media across euros, sterling and CDS.
Best value in primary: We expect that the best value in credit will be found in the primary markets this
year and believe this will also be the case in the media sector. Fortunately, we expect most media
issuance in 2009 to be from names we see as well-placed fundamentally (with most of the cyclical names
currently well-funded). Therefore while we are Underweight at this stage, we believe attractive
opportunities may arise to take selective media exposure later in the year.
Names we like…
There aren’t many of these, and even though we have Overweight recommendations on these issuers we
expect new issuance to provide a better buying opportunity than current secondary markets:
􀀗 We like very stable cash flows: SES
􀀗 We like telcos: Vivendi
􀀗 We like extremely wide, but ultimately sound: WPP
…And names we don’t
􀀗 We don’t like heavily exposed to UK advertising: DMGT and ITV
􀀗 We don’t like too-tight-for-business-profile: Publicis

目录

Advertising backdrop 4
Broadcasters 6
Consumer publishers 9
Advertising agencies 12
Professional publishers 14
Mixed fundamentals: The
good, the bad and the ugly 17
Event risk 20
Supply outlook 22
Relative Value 25
Credit Profiles 30
Bertelsmann AG 31
British Sky Broadcasting plc 33
Daily Mail & General Trust plc 35
ITV plc 37
Pearson plc 39
Publicis Groupe SA 41
Reed Elsevier plc 43
SES SA 45
Vivendi SA 47
Wolters Kluwer NV 49
WPP plc 51
Disclosure appendix 53
Disclaimer 56