Recovery Watch: Economy gets shot in arm as positive signs emerge

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The second-half recovery scenario got a boost in early March, with more signs that the recession is at an end and the advertising market has hit bottom. But most advertising forecasts still call for one to two quarters of anemic spending.

"Things have bottomed in the advertising market," said Peter Appert, newspaper and publishing analyst at Deutsche Bank Alex. Brown, New York. He cautioned: "This is not to say that business is booming, by any means-but it's getting better."

But last week saw more positive signs-helped partly by easier comparisons with a disastrous 2001 first quarter (AA, March 11). Radio showed its first up month in a year, newspapers are reporting smaller monthly lineage drops and TV networks see second-quarter sales improving.

Following a 12-month slide, radio revenue reached positive territory in January, thanks to easier comparisons. Combined national and local radio ad sales rose 1% over January 2001; local revenue was up 1% and national 2%, according to the Radio Advertising Bureau.

In a research report issued last week, UBS Warburg media analyst Leland Westerfield upgraded his 2001 U.S. ad spending forecast to call for an increase of 0.7%, up his previous call of a 1.6% decrease, led by a 5% increase in spot TV spending, which was previously forecast to grow by 5% and flat network TV spending, instead of a 3% drop.

help-wanted index

The Conference Board's monthly help-wanted index held stable in January after rising in December. After a year of monthly drops, this was the first indication that newspaper advertising may be ready to turn a corner.

While this period looks encouraging, more companies reported weak results for last quarter.

Grey Global Group posted a net loss of $24.4 million for 2001 and $28.6 million for the fourth quarter vs. net income of $19.4 million and $3.4 million, respectively, in 2000; losses were due to a $32.2 million write-down of online investments. H.J. Heinz Co., Pittsburgh, reported third-quarter earnings of $201.7 million, down 25.4%, citing low sales in pet products, seafood and food- service as well as currency effects.

CKE Restaurants, parent of fast-food chains Hardee's and Carl's Jr., reported improving results as part of a turnaround effort, with a net loss of $8.3 million for the fourth quarter and $84 million for the year, compared with losses of $148.3 million and $194.1 million for the same periods a year ago.

contributing: cara b. dipasquale

Fast Facts

Companies reporting earnings next week:

March 18: Morgan Stanley Dean Witter & Co., Kmart Corp.

March 20: General Mills, Interep National Radio Sales

March 21: Borders Group, Carnival Corp., Triarc Cos.

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