Feb. 27 (Bloomberg) -- European media stocks are trailing the market for a seventh year, the longest losing streak of any industry group in the Dow Jones Stoxx 600 Index. Some investors are betting on a turnaround.

``I would not be surprised if this group outperformed the market over the next year,'' said Adrian van Tiggelen, who helps oversee about $37 billion in global equities at ING Investment Management in The Hague. ING has purchased shares in the last two weeks, he said, though he declined to name them.

The industry's earnings growth will accelerate amid a slowdown for the Stoxx 600, according to analysts' estimates. Companies including Thomson SA, the world's largest supplier of set-top boxes and recorded DVDs, forecast improved results even as media stocks fell last week.

Faster economic expansion in Europe will boost the industry, Van Tiggelen said. Advertising revenue from this year's Winter Olympics and World Cup soccer tournament may benefit companies including Societe Television Francaise 1, ProSiebenSat.1 Media AG and WPP Group Plc.

Earnings reports from companies including Pearson Plc, the world's largest educational publisher, and Havas SA, the world's sixth-largest advertising company, will provide further evidence this week of whether analysts' forecasts are on target.

The Stoxx 600 Media Index declined 0.9 percent last week, trailing a 1.3 percent increase for the Stoxx 600. The Stoxx 50 Index added 0.9 percent. The Euro Stoxx 50, a gauge for the 12 countries using the euro, climbed 1.5 percent.

`Very Far Behind'

For 2006, the media index has risen 0.8 percent, lagging behind the 6.5 percent gain in the Stoxx 600. Only health-care and telephone stocks have performed worse among the benchmark's 18 industry groups.

The industry last outperformed the Stoxx 600 in 1999. Since then, the media index has fallen 53 percent as changing consumer habits and the rising popularity of the Internet hurt companies' performance. Yet their average price-to-earnings ratio of 19.3 still exceeds the benchmark's 16.5.

Thomson, based in the Paris suburb of Boulogne-Billancourt, and London-based WPP, the world's second-biggest advertising company, both released 2005 results last week that failed to meet estimates.

Earnings at TF1, the Boulogne, France-based owner of the country's most-watched television station, beat estimates. So did profits at Antena 3 Television SA, Spain's second-largest commercial television station, and Luxembourg's SES Global SA, the world's largest satellite broadcaster.

Expected Slowdown

``Media companies are coming from very far behind,'' said Philippe Gijsels, head strategist at Fortis's private investment unit, which manages $62 billion.

Where the companies are heading is more important, said Gijsels, based in Brussels. ``They are posting good forecasts, advertising is up, the economy is improving and we have two big sporting events.''

Analysts expect profit at Stoxx 600 media companies to rise 15 percent this year, up from 14 percent last year, according to estimates compiled by FactSet Research Systems Inc. in London. The pickup contrasts with a slowdown for the Stoxx 600 to 8.2 percent from 23.6 percent in 2005, FactSet's data shows.

The industry is one of only five projected to report faster expansion. Construction, financial services, personal care and retail companies are the other industries expected to see a pickup, with growth ranging from 12 percent to 16 percent.

Shares of Thomson advanced 5.9 percent, their biggest jump in more than 2 1/2 years, on Feb. 23 when the company forecast a return to profit after two years of losses.

Seeing Opportunities

Advertising in Europe may increase 4.4 percent to a record $112 billion this year, according to ZenithOptimedia, a London- based buyer of media space for advertisers. Last year's revenue climbed 3.1 percent to $108 billion, said Jonathan Barnard, head of publications.

``The two big sporting events of the year, the Winter Olympics and the World Cup, normally create plenty of marketing opportunities,'' said Barnard. The Olympics ended yesterday in Turin, Italy, and the World Cup will be held in June and July across Germany.

Economic expansion may also spur demand. The European Commission predicted on Feb. 21 that the economy of the euro region will grow 1.9 percent this year, up from 1.3 percent in 2005. The commission raised its projection for this year's U.K. growth to 2.4 percent, up from 1.8 percent last year.

ProSiebenSat.1, based in the Munich suburb of Unterfoehring, forecast earnings will increase in 2006 as an improving German economy spurs advertising sales. The World Cup is set to draw more than 1 million visitors to Germany.

Facing Risks

The outlook from ProSiebenSat.1 shows the company expects advertising sales to increase as much as 4 percent this year, according to Credit Suisse's Nick Bertolotti, ranked as one of the top media analysts by Institutional Investor magazine.

Bertolotti, who has an ``outperform'' rating on the company, wrote in a Feb. 21 reportt that he expects consumer demand to boost revenue. ``The European and especially German consumer is coming to life,'' the London-based analyst wrote.

Risks for the media industry including maintaining customers' and advertisers' loyalty in a market that offers increasing choice. Growth of so-called broadband access to the Internet, for instance, provides consumers with alternatives to radio, television and newspapers.

Newspapers and other ``traditional media'' are having difficulty holding on to readers and advertisers, said Edward Niehoff, head of global equities at ABN Amro Asset Management in Amsterdam, which manages $224 billion.

`Much More Important'

``There are clear losers in this industry,'' said Niehoff. ``Companies that don't adjust will see their profit margins coming under increasing pressure.''

With so much change in the industry, coupled with a growing economy, some investors believe that media shares are well positioned for a lift-off.

``Media is becoming much more important now that people have broadband at home and mobile telephones that can receive content,'' said Fortis' Gijsels. ``Media stocks are going to ride a wave of growth that is only beginning.''

To contact the reporter on this story: Martin Boer in Amsterdam at mboer1@bloomberg.net

Last Updated: February 26, 2006 19:31 EST