The Crystal Ball for 2009

“When there is blood in the streets, buy real estate.” In the last few months, we have all witnessed the widespread financial panic that this old adage refers to—but few companies appear bold enough or well-positioned yet, to take proactive advantage of the current investment opportunities (even if they could get the funding). However, the best competitors will soon peek out from the rubble, and consider where to place future bets. What are the truths about our sector that will continue into (and despite) the new year? What fundamental structural shifts will still dominate? Who is going to buy whom? What can we do now to further our own marketplace agendas?

8 Crazy Ideas

Allow me to offer my Top Predictions for 2009 (okay, maybe into 2010 for some of them). You heard it all here first.

1. “Musical Chairs” in wireless mergers
   Every sector is still in play. Continued hyper-competition will push a few lapsed transactions past the economic tipping point. In prepaid, the market push from the big boys of AT&T and Verizon entering this segment will compel MetroPCS and Leap to finally forge a more formal combination. The same will hold true in push-to-talk, which will drive Sprint to spin off former Nextel, as well to push for a further carveout/buy-in of WiMax to get the business more industry scale. Up north, regulators will begin to look more kindly on a longer-term Telus and Bell Canada spinoff combination, as Rogers and other cablecos continue to add to their quad play, and as the new carriers build out from the new licenses. I see four or five significant wireless deals in the NAFTA region alone.
2. “Barbarians at the Gate” via increased direct foreign investment
   Timing is ripe for a new intruder in North America. Semi-distressed assets as well as rising stars overseas make this likely. Look at well-financed and visionary players like Carlos Slim or Deutsche Telekom or SK Telecom to make a move on some combination of well-respected but troubled brand icons such as Sprint, Motorola, Yahoo, AOL, Alcatel or Nortel. Some re-combinations amongst these players are also likely, but these deals will be initially triggered by a spoiler, such as Microsoft, Google, private equity, Carl Icahn or one of the newer foreign interlopers.
3. “Back to the Future” in the media and advertising wars
   The recession will force a return to the core. The automotive and financial sectors have been hardest hit, but advertising dollars across the board will become more scarce, forcing a re-set on growth expectations for mobile and online advertising streams. Look for traditional media (Time Warner, the studios et al) and the ad agencies to force a return to Excellence in editorial and copy (and escapist sports and entertainment programming) as the preferred way to attract eyeballs, viewers. Look for a jettisoning of some marginal e-advertising investments, that were designed to serve the long tail. There just won’t be as much wind for all sails.
4. “Portal of Choice” turns out to be (surprise!) mobile handsets
   It’s not a surprise, it’s been a long time coming, and Apple was the latest provocateur. When you get to well over 1B in installed base, you start to redefine personal communications. When you have upsell cycles in emerging markets that are unfolding faster than in G-8, you have an industry tsunami in the making. When Nokia, Google, Samsung, RIM and Sony all come after Apple with both guns blazing on multimedia and their ecosystems, you have a total sector in the passing lane (and iPhone becomes less iconic).