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FIVE-YEAR OUTLOOK SHOWS HEALTHY GROWTH OVERALL

By Published on .

There are more silver linings and fewer clouds on the horizon for ad-supported media, according to the annual communications industry forecast from investment banker Veronis, Suhler & Associates.

A few media segments-such as cable TV and interactive, digital meda-will have significant growth, but virtually all ad-supported media will grow at a healthy rate over the next five years on a par with the rest of the U.S. economy.

"Historically, the [gross domestic product] has grown at roughly twice the rate of advertising. Now they're in line. Basically, that says that spending in advertising has gotten in proportion to the overall growth prospects for our country," said John Suhler, a principle of VS&A.

According to the report, ad spending will grow at an annual rate of 6.3% over the five-year period from 1994 to 1998 climbing to $119.2 billion.

During the same period, the GDP will rise at an annual rate of 6.9%, climbing to $8.9 trillion.

By contrast, U.S. ad spending grew at an annual rate of only 2.4% during the five-year period from 1989 to 1993, compared with an annual rate of 5.4% for the GDP.

While all ad-supported media are recovering to the point of parity with GDP, only cable will see very high growth over the next five years, growing at an annual rate of 11.9% and reaching $4.4 billion in 1998, predicts VS&A.

Interactive digital media also will rise at a double-digit rate during the period, climbing 11.7% annually to $22.3 billion in 1998, but Mr. Suhler said it is still a relatively small base of advertising and mostly all end-user spending supporting that growth.

TV broadcasting, including networks and stations, will rebound slightly, growing at an annual rate of 5.5% and reaching $34.7 billion in 1998.

Radio, including networks and stations, will rise at 7.1% annually, growing to $13.2 billion in 1998.

Newspapers will rise 5.9% annually to $60.3 billion, with advertising accounting for $42.5 billion of daily newspaper revenues, in 1998.

Magazines will increase 5.9% annually to $27.8 billion, with consumer publications accounting for $19.1 billion, in 1998.

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