Broadcast chiefs anticipate TV and radio revenue boom

By Published on .

Broadcast chiefs told a Wall Street gathering last week that advertising is primed for a turnaround-a bullish view, worlds away from recent remarks by ad agency heads.

TV and radio companies expect to pick up market share from print and other media as advertisers reallocate still-depressed budgets, said speakers at last week's Communacopia Conference. The annual meeting, sponsored by Goldman, Sachs & Co., brought together heads of media and telecommunications companies.

Media CEOs, including AOL Time Warner's Steve Case and Walt Disney Co.'s Michael Eisner, were penitent but upbeat, apologizing for poor stock performances and promising that improvements in ad revenue will boost the bottom line in 2003. Broadcasters are very positive, based on recent upfront marketplace success and pacings for coming months.

The mood was in marked contrast to the gloom at last year's gathering, which came only three weeks after the Sept. 11 attacks. The optimistic predictions bore little resemblance to those by agency company leaders, who have forecast the recovery may not come until 2003. (AA, Sept. 23)

TV's ad-revenue growth exceeds the recovery rate of the advertising market, said Rupert Murdoch, chairman-CEO of News Corp. Ad rates at the company's Fox network are up for both the upfront and scatter markets and sales were up more than 20% for October and November as of Sept. 10, which would cancel the effect of easy year-over-year comparisons, he said.

Strong demand

Mel Karmazin, president-chief operating officer of Viacom, dismissed talk that TV's surging sales are only a factor of easier comparisons and political advertising. "I assure you, it's deeper than that," said Mr. Karmazin, whose company owns CBS and UPN. He noted TV stations' pacings show strong demand will continue past the November elections.

One reason is advertisers are shifting share to broadcast media, both in the local and national arena. "Advertisers are seeing a flight to quality [media] brands. ... They are looking for the center of the bull's-eye," said Ron Furman, exec VP-marketing and sales for Univision.

And it's also happening in local markets, where TV and radio are gaining share from newspapers. National spot TV is the best it's been in years, thanks to a tight scatter market, said Mitch Stern, chairman-CEO of News Corp.'s Fox Television Stations. "Radio and TV have room to grow," he said. "I don't think you can do the same with newspapers."

Radio will continue to gain share because it is a cheap local medium, said Farid Suleman, chairman-CEO of Citadel Broadcasting Corp. There is a great "CPM gap" between local radio and newspapers, which broadcasters can reduce to gain revenue, said David Field, president-CEO of Entercom Communications Corp.

Relaxed rules allowing multiple-station owners to assemble TV and radio packages have also taken share from newspapers. "Some of the fruits of that labor are being seen now," said Joel Hollander, president-CEO of Westwood One. "In the next 18 months, you're going to separate the men from the boys in terms of who the good operators are."

In this article:
Most Popular