E&Y media analyst Luca Mastrodonato: “The upturn has come as a surprise as many companies were not expecting a pick-up in advertising spend until at least 2011.

“Online classifieds are still suffering from cyclical pressures and struggled to grow during the same period. Publishers will be unable to grow their online revenues significantly until the recruitment and property markets pick up.”

Two accountancy firms are reporting differing assessments of this year’s media economy so far.

Ernst & Young says...

In H1, 70 percent of companies in FTSE’s All-Share index reported half-year revenue growth, up from 12 percent in 2009’s first half.

Organic revenue grew just 2.5 percent (median), but operating profit was up by 34 percent (median) - companies made big cost cuts.

But Grant Thornton says...

The market cap of publicly-traded mid-market media companies in its 98-strong Media Watch index fell by 12 percent during Q2 - in-line with the 13 percent drop in the FTSE 100 and FTSE 350. The firm also observed lower valuations for some FTSE 100 media companies.

Media and entertainment head Mark Henshaw: “But we have not seen values drop off a cliff as we did in 2008 and early 2009. Fears that public sector spending cuts, particularly in the Central Office of Information (COI) would hit the media sector hard have not been realised.”

E&Y’s assessment of the disparity between profit and revenue is key. Many media companies in Q2 bounced back to operating profit. But, for many, this is way out of kilter with what is flat, negative or slow actual income growth and has been achieved mostly thanks to big cost cuts…

There is only so much a company can cut without reaching bone so, expect this technical profit growth to evaporate in coming quarters.

The disparity between the two firms’ findings also suggests larger media companies are benefiting from upturn faster than smaller ones.

Interestingly, E&Y says: “Companies with a significant share of their revenues coming from advertising and/or communications experienced the highest increases in top-line growth with their median organic revenues increasing by 3.2 percent compared with other companies’ 0.7 percent growth.”