Cable and Direct Broadcast Satellite TV Set the Pace

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CHICAGO ( -- Cable and direct broadcast satellite TV are setting the media pace. The two segments combined accounted for 42% of total media revenue of the 100 Leading Media Companies


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in Advertising Age's annual report, up from 40% in 2002.

Cable revenue
Revenue for cable, which includes both multiple system operators and cable TV networks, grew 11% in 2003 to $75.24 billion from the 32 companies in the Top 100 with cable, beating last year's 10.3% growth. Direct broadcast satellite even topped that with 20.5% combined growth, to $13.11 billion, from the two mega-players, No. 7 DirecTV Group and No. 12 EchoStar Communications Corp.

Overall, media revenue for all companies in the Top 100 rose 7.3% in 2003 to $208.90 billion, beating last year's 6.3% jump, with growth reported across all media segments.

Time Warner easily No. 1
In the top-heavy media world, No. 1 Time Warner, at $29.25 billion in 2003 media revenue, surpasses the distant No. 2 Comcast Corp. by more than $11 billion. Time Warner's cable segment, packed with content and distribution businesses, makes up more than half its media revenue. Even without the $8.6 billion in revenue that its America Online division contributes, Time Warner would easily rank No. 1. The top four companies in the ranking make up over one-third of the total revenue of the Top 100.

In this report, media are U.S. content and distribution businesses supported by ad revenue. Foreign operations of U.S. media companies are excluded where possible, as are non-U.S. media operations of foreign-based companies. Non-media businesses, as well as movie distribution, TV production and Yellow Pages, also are excluded. As an example, book publishing, film and video returns are removed from Time Warner's total worldwide revenue, leaving $29.25 billion in media -- 74% of the worldwide total.

Comcast's content bid
Earlier this year, Comcast, cable's largest player and largely a distribution entity, made an attempt to gain a crucial content component by proposing to buy No. 4 Walt Disney Co. for $54 billion. Disney rejected the unsolicited offer, which would have put a combined Comcast-Disney neck-and-neck with Time Warner in terms of media revenue.

Comcast could pick off No. 17 Adelphia Communications Corp., currently in bankruptcy proceedings, in a possible sale at year-end, but Adelphia comes with 5.3 million subscribers, and no content. Comcast draws 95% of its revenue from its 21.5 million subscriber MSO.

Cable companies are increasingly offering more than just TV as they expand into high-speed Internet and even digital phone service. Time Warner Cable expects to offer digital phone service systemwide by the end of the year.

The 'other' TV medium
Growth at the "other" TV medium, broadcast TV, registered only 2.1% to $33.52 billion in revenue for the 32 companies in the Top 100 with broadcast TV.

But this year is looking better for the medium, its ad revenue up 9% in the first five months for network and spot combined, according to TNS Media Intelligence/CMR. The Olympics and the fall elections promise to power broadcast through the rest of the year.

General Electric Co.'s freshly minted, 80%-owned NBC Universal hopes to reap Olympic bounty. The company was formed when NBC bought Vivendi Universal Entertainment from French conglomerate Vivendi Universal in May. Vivendi, ranked No. 26 last year, retains a 20% interest in NBC Universal.

NBC strengthened its No. 5 ranking this year with cable network properties USA Network, Sci Fi and Trio, acquired in the transaction. The company slotted them alongside its Bravo and CNBC networks in its NBC Universal Cable division. Revenue produced by Universal Studios and theme parks, also part of the acquisition, are not counted in this report.

Radio grew least
Radio as a medium grew the least, an anemic 1.5% to $10.08 billion in revenue from 20 leading media companies with radio. National spot radio has seen a recent spike in ad revenue, however, with a 25.4% gain in May, and a 5.6% gain over the first five months of this year, according to TNSMI/CMR.

In fact, ad spending across all categories of consumer media is up more than 10% through May 2004, according to TNSMI/CMR, with the biggest gainers being Spanish-language newspapers, up more than 100% from a low base year, Internet up 25%, and syndicated TV up 17.5%.

Martha Stewart falls off list
Revenue for magazines was up only 2.8% for 33 leading media companies, although ad spending in consumer magazines was up 7.1% through May. Countering the Top 100's lackluster showing were a 13.3% increase in magazine revenue at No. 11 Advance Publications, 12.4% at No. 15 Hearst Corp., and 15% at No. 31 Meredith Corp. Martha Stewart Living Omnimedia, No. 95 in last year's report, fell off the list year due to a 25.6% decline in magazine revenue.

Newspapers grew a collective 4% among 36 Top 100 companies; category leader Gannett Co. advanced 5.8%. For the first half of 2004, newspaper advertising grew 3.8% as retail (48% of total) moved 2.6% and classified (35% of total) grew 5.5%, according to the Newspaper Association of America.

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