The effect on the media business of a war in Iraq is unclear. But rumors of war already have impaired both media operations and media stocks.

Though media companies and investors are hopeful that advertising will strengthen soon after the beginning of any armed conflict, marketers' desire to wait for some postwar or even midwar sense of stability is already crimping media companies' performance, according to anecdotal indications.

"You have a skittish environment," says Jonathan Jacoby, an analyst with SunTrust Robinson Humphrey. Advertisers, he says, "are waiting. They're afraid to place dollars."

The question of how long this holding pattern might last, and how long any armed conflict might be, has a significant impact on media conglomerates such as

AOL Time Warner

(AOL)

,

Disney

(DIS) - Get Report

and

Viacom

(VIAB) - Get Report

, all of which have seen their shares fall in value since the beginning of the year.

The uncertainty surrounding a possible war with Iraq impinges on advertising purchases the same way it affects capital spending and hiring plans, says Hal Vogel, an investor and longtime media analyst. "Advertising is not any different than any of these other decisions," he says.

Perfect World

At issue for advertisers is the context of their advertising. In a perfect world for marketers, the editorial material that sandwiches their ads on broadcasts or in print is content that makes people feel good about the world -- content that puts them in the mood for spending money.

That likely wouldn't be the case if fighting were to begin in Iraq. Amid bombing, death and other elements of armed conflict, commercial messages would be pre-empted, rescheduled, ignored, or seem suddenly inappropriate, reflecting badly on the advertiser.

"All of these things are issues, so people hold back," Vogel says.

"No one is going to start throwing money

at advertising buys knowing two weeks later there is going to be a war," says Jacoby. "You don't want to be associated with a war. You don't want any association with a terrible event like a war."

The most recent evidence for this trend, says Jacoby, was TV broadcaster and newspaper publisher

Belo's

(BLC)

announcement Tuesday of first-quarter results that will fall short of expectations.

Though Belo didn't make references to Iraq in its press release, executives at

Clear Channel Communications

(CCU) - Get Report

, the nation's largest operator of radio stations, made an explicit connection last week between waiting for war and first-quarter results.

"Q1 started very, very strong," Clear Channel president Mark Mays told analysts on a conference call, according to a CCBN transcript. "As the war rhetoric started to increase over the last two or three weeks, we have simultaneously seen advertisers start to sit on their hands and be very cautious about when the war will start, and, therefore, they have slowed down placing business for late February and early March."

To Be Sure

On the bright side, various signs indicate that advertisers are still spending money, says Jacoby. For example, advertising on the NCAA men's basketball championship, better known as March Madness, is boasting sellout rates and pricing better than last year, he says. Annual business in place at local TV stations, says Jacoby, is double where it was last year, indicating pent-up demand for spending that will translate into ads later in the year.

Cancellation rates for previously reserved advertising also appear to be at lower-than-normal levels.

And Clear Channel's Mays says that despite advertisers' first-quarter hesitation, "We're seeing advertisers continually place business for the second quarter, and, in fact, we're ... feeling very robust about Q2." That's a sign, perhaps, that advertisers are hopeful a conflict will be quick and nontraumatic for American audiences.

"Advertisers are not walking away," says Jacoby. They're just being selective and more cautious."