100 Leading Media Companies Report; Revenue Hits $268 Billion

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CHICAGO (AdAge.com) -- Internet and cable were the growth locomotives behind the 6.6% increase in 2005 U.S. media revenue, reaching $268.48 billion for the 100 Leading Media Companies. In some ways, broadcast TV and newspaper executives must have seemed more like captives tied to the tracks.
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Time Warner
Time Warner, powered by its internet and cable offerings, retained its position as the No. 1 media company in the U.S. at $33.73 billion, up 0.9%, far ahead of the $22.08 billion from Comcast Corp. As runner-up, Comcast replaced Viacom, the media-entertainment company that split early this year into CBS Corp., No. 7 at $11.80 billion, and a much-reduced No. 9 Viacom that drew $8.25 billion from its movie and cable network properties.

Media, defined in this annual report as information and entertainment distribution systems in which advertising is a key element, takes in the obvious traditional media companies but also Hollywood as film clips have become product placements. Movies grew 0.3% to $19.27 billion in U.S. revenue. This year Ad Age isolated U.S. from worldwide movie revenue, leading to prior-year adjustments in companies with movie units.

Internet: $16.92 billion
The ultimate distribution system will be the internet, if it isn't already so. It certainly has the eyeballs. The medium contributed $16.92 billion from advertising and subscription fees from 14 companies, up 20.5%. Ad Age does not count internet retail transactions in its totals.

No. 19 Google and No. 21 Yahoo are neck in neck from their search ad totals of $3.71 billion and $3.67 billion in revenue, respectively. But Time Warner's AOL is at the head of the class at an estimated $6.32 billion in U.S. revenue. However, AOL revenues are declining (down an estimated 7.3% in 2005) because of a drop-off in subscriptions, a revenue model Time Warner is set to change in favor of an ad-supported AOL, a new-generation network.

The network aspect is reflective of the convergence taking place across the media spectrum, none more dynamic than in the telecom and cable universe. Cable, moving quickly to add phones to its bundle of services, accounted for 38.5% of Top 100 revenue: $71.85 billion from multiple system and direct broadcasting satellite operations at 14 Top 100 companies, up 12.6%, and $31.4 billion from cable networks from 17 companies, up 12.5%.

Cable TV up only 2.6%
Cable may be receiving a wakeup call, at least on the ad side. Cable TV network advertising in first-half 2006 is up only 2.6%, that follows 11% growth for full-year 2005, according to TNS Media Intelligence. Analysts and other experts see the internet, whose advertising was up 18.9% in the same period, siphoning off cable advertising in the way cable robbed the broadcast TV ad crib.

Meanwhile, TV, caught in the trough of a nagging ad cycle lacking an Olympics or general election, seesawed to $31.75 billion, down 3.7% from 29 media companies. TV in this report is network and owned-and-operated stations. Through mid-year 2006, network and spot advertising have grown 5.4% in TV's fallow ground made fertile by the Winter Olympics and a renewal in political advertising.

Newspapers have become media's favorite whipping boy as more and more ad dollars migrate to the web. Among the 35 media leaders with newspapers, those properties advanced only 2.1% to $35.68 billion in revenue. The industry's biggest casualty was Knight Ridder, most of its newspapers now in returns for McClatchy Co., No. 24 on the list, and MediaNews Group, No. 36. KR's demise also introduced to the list newly formed Philadelphia Media Holdings, No. 77, a holding for the Philadelphia Inquirer and Daily News. The climate for newspapers continues to sour. In first-half 2006, local and national advertising fell 2.7%, which combined with stagnant circulation, have led many of the leading metro dailies to cut staff.

Magazines advanced 6% to $20.39 billion generated by magazines at 30 media companies on the list. The list gained two new magazine members: No. 66 Wenner Media, powered by the inclusion of Us Weekly, and No. 95 Bauer Publishing, led by In Touch Weekly. Consumer magazines are up 4% in revenue in first-half 2006, with all top 10 ad categories showing strength except for last year's lead category, autos, down 13.3%.
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