Methodology for this report

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The 100 leading Media Companies are ranked by net revenue generated by their U.S. media properties -- largely defined as media distribution businesses supported by advertising.

Revenue from non-media activities are not part of the totals. Non-media areas include book publishing, book and record clubs, TV/movie production and syndication, media-buying services in traditional media or on the Internet, electronic retailing, real estate, paper mills, wireless services and Yellow Pages publishing.

Though AA does not include Yellow Pages publishers in the media list, the leading companies in that medium are presented in chart and story (see P. S-18) for the reader's convenience.

Revenue is either for yearend '99 or the latest available fiscal year and often is stated pro forma -- either a company's own pro forma reading or that provided by secondary sources. Pro forma figures are applied to both years as if acquisitions or divestitures were on or off the books for two consecutive years. Pro forma numbers capture these media companies, particularly those active in mergers and acquisitions, where they are now rather than where they've been.

NUMBER OF PRIVATE COMPANIES

Pro forma numbers from secondary sources, BIA Research and Duncan's Radio Market Guide, run at least through the first quarter 2000; they are useful in determining net revenue totals for private companies. Among the Top 100, 34 are private.

Footnotes to charts segmenting the Top 100 by media category (see Pages S-8 and S-10) indicate the composition of revenue, particularly as it relates to acquisitions and/or divestitures within the 100 Leading Media Companies.

Where segment reporting by public companies includes more than one medium in a common segment, Advertising Age breaks out the respective media. Radio and TV are most typically coupled under a "broadcasting" segment, in which case Ad Age isolates the TV and radio components.

Estimates are calculated by AA editors or obtained from the following: cable, Paul Kagan Associates; radio, BIA Research and Duncan's Radio Market Guide; and TV, BIA Research. Company comments are solicited.

Other sources included the "Editor & Publisher Year Book," Audit Bureau of Circulations, the Ad Age 300 top magazines report (AA, June 12) and the Yellow Pages Publishers Association, which provided a list of top Yellow Pages publishers for AA to research.

RETURN ON SALES COMPARISON

Company 10-K reports were the source for net revenue and net income used to create the top 50 return-on-sales chart (see Page S-12).

Because pro forma figures are used in cases of companies active in mergers and acquisitions, the pro forma number for media is often higher than net revenue figures for the entire company.

As an example, the leading publicly held media company by return-on-sales, Tribune Co., had media revenue of $5.4 billion and only $3.2 billion in fiscal net revenue. The difference is the former contains the revenue stream from Tribune Co.'s acquisition of Times Mirror Corp.

Companies held as 50/50 joint ventures are given a listing separate from either "parent," whose revenue streams don't include holdings of 50% or less anyway, according to standard accounting practices. Consequently, the "parent" does not receive credit for its 50% equity. Only two companies on the list are shared ventures: Lifetime Television, owned 50/50 by Hearst Corp. and Walt Disney Co., and Comedy Central, a joint venture of Time Warner and Viacom.

FOREIGN MEDIA NUMBERS EXCLUDED

Foreign media returns were excluded from total media revenue when they accounted for 10% or more of total corporate revenue. Foreign-based media companies were ranked solely by their returns from U.S. media units.

Chart entries generally bear the name of the parent, but in the case of companies with broad segments, the entry is the more recognized media unit, hence Hachette Filipacchi Magazines is the entry and not its parent Lagardere, and Gruner & Jahr USA Publishing rather than its parent Bertelsmann.

Staff for this report:

R. Craig Endicott, Dataplace editor; Kevin Brown, group data manager; Megan Friedly, research coordinator; Mike Ryan, editor, Special Reports; Geoffrey Shives, design director; Peter Killian, research assistant.

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