Amid a global economic environment plagued by debt, joblessness and recession fears, an unlikely haven has emerged for investors in the form of media companies that own sports rights.
It's been a long time since media companies were considered a good investment, but there's no doubt that the business of sports has so far been immune to most of the economic damage -- a theme likely to be prominent in the Reuters Global Media Summit in New York, London and Paris next week.
Although the media are often among the first to suffer in an economic downturn as companies cut discretionary spending on advertising, consumers have shown little inclination to cut back on sports entertainment, particularly in the United States.
Despite high unemployment and falling home values, they keep paying up to take costly TV packages, such as Sunday Ticket, DirecTV's
Indeed, BSkyB Chief Executive Jeremy Darroch said last week he did not see the tough consumer environment hitting what he expects to be good profit and cash generation.
Advertisers, too, seem willing to pay top dollar for commercial time during key sports events. Some of the 30-second spots for the upcoming U.S. Super Bowl for instance cost upwards of $3.5 million.
That sort of environment has allowed TV networks to strike ever richer rights deals with the major sports leagues, without seriously hurting their own profitability.
Walt Disney Co's
And the next contract talks for Major League Baseball -- which could start in the coming months -- are expected to yield a TV deal worth about $1 billion a year.
Executives from ESPN, the NFL and leading digital sports distributor Perform Group
The outlook for media companies that don't own sports rights is, however, a bit murkier. Much depends on how consumers react to the latest bout of economic uncertainty.
If they hunker down in their living rooms, that could benefit companies whose business revolves around home entertainment such as movies and video games.
Still, video game publishers are taking steps to protect themselves from a further downturn in consumer spending.
At the moment, the strategy among many publishers is to mimic Hollywood studios and release fewer games and concentrate on proven franchises.
This explains why so many of the top games in the current holiday season are sequels like Battlefield 3 from Electronic Arts
Other guests executives from include Take Two Interactive
How consumers behave when it comes to their cable service is widely debated.
Until now, they have largely been willing to pay for cable packages while adding over-the-top services provided through the Internet by the likes of Netflix
The result is there have been few signs of significant cord cutting, the phrase used to describe consumers who choose to cancel their cable service and stick with just the Internet for entertainment.
At this point in time, we don't see any meaningful cord-cutting, Robert Marcus, chief operating officer of Time Warner Cable
That does not mean that consumers are not viewing a whole lot more video online -- they are, in fact ... but it tends to be at this point complementary.
The question is whether consumers can keep spending on both -- or will it become an issue of taking, say, either Time Warner's cable TV service or Netflix.
SLEEPWALKING TO DISASTER?
So far, global advertising agencies seem sanguine about further economic deterioration, reasoning that multi-nationals sitting on big cash piles built up since the 2008 Lehman crash will be willing to spend on their brand.
No one ever got fired for trying to hold onto market share, said Sorrell, who expects WPP's sales may grow by around 4 percent next year -- in line with the International Monetary Fund's GDP growth forecast for 2012.
Next year's ad spend will also be boosted by the Olympics, the U.S. presidential election and the Euro 2012 soccer championship -- a combination that comes around every four years -- as well as Japan's rebound from the tsunami.
Jonathan Barnard, head of forecasting at Publicis
Barnard says spending on television, outdoor, online display and video and social media advertising is currently strong. If the economy does worsen, the bulk of the cuts will probably hit the newspaper, magazine and radio sectors, he said.
The current assessment is that the economy is doing badly, the news has been negative for several months, but ... we aren't in a panic situation yet.
In general, media executives remain surprisingly upbeat, though admit some uncertainty about the impact of the euro zone and U.S. debt situations.
Morgan Stanley analysts, writing that companies may be sleepwalking to disaster, noted the market did not appear to share their opinion.
Share prices are looking more sceptical, pricing in a downturn and wary of the apparent cost-complacency of the media businesses, they wrote in a note to clients.
The U.S. S&P media index <.GSPME> is down 16 percent from its 2011 peak set in early May, while the STOXX Europe 600 media index <.SXMP> is down 20 percent in the same period.
The Reuters Global Media Summit will take from November 28 to December 1.
(Additional reporting by Liana B. Baker and Yinka Adegoke in New York; Editing by Peter Lauria and David Holmes)