100 LEADING MEDIA COMPANIES; CHANGE PARTNERS! TURNOVER SWEEPS FIELD

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Consolidation among the nation's 100 Leading Media Companies surely reached its apotheosis earlier this month with the proposed sales of Capital Cities/ABC to Walt Disney Co. and CBS Inc. to Westinghouse Electric Corp. Or did it?

General Electric Co.'s NBC TV stands in the wings, its dance card full of suitors, especially now that restrictions against networks syndicating their own programs have been eased.

Congress this session could touch off a new round of mergers when it is expected to liberalize restrictions on media ownership. Content providers and media distributors are joining forces to feed the multiplying media outlets, from proposed 500-channel cable systems to two new TV networks to online computer services.

The more media bought, the more media sold. The inevitable coupling turns cyclical as marriages spawn divorces, at least for media units that no longer fit revised corporate strategies.

This most recent round of buyouts has its detractors, who fear monopolistic tendencies and blandness emerging among the power brokers. They may have a point. But content aside, the rapacity of many media kings over time has had no seismic impact on revenues.

There may be no media concentration greater than among the top 10 media companies. In this year's report of Advertising Age's annual 100 Leading Media Companies, those 10 control 42.6% of the $89.9 billion in media revenue generated by the top 100 (See chart below right).

This compares with 40.2% of $58.4 billion for these same companies in the 1986 benchmark year. The actual top 10 in '86, a different set of companies, accounted for 45% of the composite 100 leaders, indicating the share of the media pie for the top 10, regardless of its composition, hasn't changed that much.

The overall average annual revenue growth of the top 10 represents a healthy 6.3% since '86, but that is inflated by cable's collective 17% annual growth rate among the same companies. Cable is the growth medium of choice.

Appearing like lumbering giants are CBS Inc., its revenue growth stuck at 2% per annum, Times Mirror 0.3%, Gannett Co. 3.8% and NBC 1.5%. Such low figures are somewhat deceptive in the case of CBS and Times Mirror, each having spun off divisions (magazines at CBS; TV and cable at Times Mirror) since 1986, thereby losing revenue flow. In this interval, New York Times Co., at 5.2%, also sold cable and women's magazines.

Conversely, cable-ladened Tele-Communications Inc., Time Warner and Advance Publications charted annual average revenue growth of 26.5%, 9.1% and 5.8%, respectively.

Cap Cities/ABC, this year's top media company by revenue, advanced 5.5% annually since its '86 merger. ESPN grew from 4.5% to 15% of Cap Cities/ABC revenues in the interim, contributing just under 2 percentage points of that growth.

Concentration is hardly the province of the top 10. In fact, there has been a record turnover in ownership in the number of top 100 media companies this past year. Counting networks, 15 of the top 100 from last year's report have changed ownership or will change in the next few months, exceeding the previous record of 11 that dropped from the '87 report in 1988.

The 100 media companies with new or proposed owners include: Ziff-Davis Publishing, bought by Forstmann Little & Co.; Chicago Sun-Times Co. by Hollinger Inc.'s American Publishing Co. unit; Multimedia Inc. by Gannett; Crown Media by Marcus Cable Co. and Charter Communications; Paramount Communications by Viacom Inc.; Paragon Communications and KBLCOM from Houston Industries and Cablevision Industries Corp. to Time Warner (TW actually bought the 50% of Paragon it didn't already own); Sammons Communications and TeleCable Corp. to TCI; Patrick Media Group to Hellman & Friedman Capital Partners; LIN Television, spun off from LIN Broadcasting Corp.; Park Communications to an investor duo funded by the Alabama State Retirement Fund.

Entry to the chart was secured by Bertelsmann AG when it snagged Women's Magazine Group from New York Times Co.

Companies in this report are ranked by estimated net revenue for U.S.-based media properties. Estimates most often are worked out with the company. Sources also included company annual reports and Duncan's Radio Market Guide.

"Media" include the traditional (newspaper, radio, TV, magazine, cable, outdoor), free-standing inserts, in-store, shared mail, ad-driven pamphlets and data-based operations loosely termed information services such as the three online networks, all new entries to the top 100.

Not included in media are book publishing, book and record clubs, movie and TV production houses and Yellow Pages (see chart below).

Cable

Cable contributes heavily to the 100 media, from Cap Cities/ABC to No. 100 TKR Cable Co.

Cap Cities/ABC gained $925 million in cable revenue from ESPN, producer of the largest ad pot among U.S. cable networks-$403.4 million in 1994, up 18%, according to Competitive Media Reporting.

Cable revenue rose to $23.3 billion among the 100, a 5.4% growth held in check by an FCC-imposed 7% rollback in prices for basic and tiered services.

Cable now claims 26% of the media pie of the 100, up from 12% in '86 when it generated $6.9 billion among the 100-a 16.3% average annual rate of growth in revenue over the eight years.

Thirty-six of the media companies held cable in '94, vs. 37 in '86; however, eight of the cable companies in '86 have since merged into others on the chart. A Baby Bell cracked the 100 for the first time when US West bought Wometco and GCTV in the Atlanta area. Ad Age rechristened the company US West/Southern Multimedia for the purposes of this report.

Cable divisions of 100 media companies went on the block this year with Cox Enterprises picking up Times Mirror Cable, Continental Cablevision taking Colony Cable from Providence Journal Co. and TCI buying Viacom's MSO business.

Revenue from newspaper properties hit $26.04 billion among the 100, up 7% for one of the better years for newspaper publishers. Newspapers accounted for 29% of all media revenues of the 100, down from 37% in '86 when newspapers amassed $21.4 billion in revenue.

In that eight-year review, newspapers produced an average rate of growth of only 2.5% in revenue, a basement rate influenced by selloffs, closures and periodic depressions in retail ad business.

Broadcast

Broadcast (TV and radio) properties collected $20.4 billion in revenue among the 100, up 11.6%, and accounted for 22.8% of media revenue of the 100. Broadcast in '86 drew $15.5 billion in revenue to account for 27% of the media pie. Broadcast revenue has grown an average 3.5% per year between '86 and '94.

TV in '94 rode out from under a three-year ad slump on the back of a strong economy and political advertising, the latter contributing to a third of the increase in sales of network stations. Cap Cities/ABC's combined growth of 12.2% for owned-and-operated stations and ABC Television Network is attributed to these market forces.

As proof of a heightened competitive environment, Cap Cities/ABC this year anted up $50 million more in compensation fees than it paid network affiliates in '94. The reason: combat encroachment by News Corp.'s Fox TV, Time Warner's WB Network and United Paramount Network.

Magazines

Magazines pulled $15.8 billion in revenue among the 100, up 6.7% in 1994. The medium accounted for 18% of the 100 media total, compared with 16% in '86. Magazines achieved a healthy 6.6% annual rate of growth in revenue between '86 and '94. In that eight-year interval, nine magazine companies merged into magazine properties of current-day 100 media companies.

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