Time Warner continues to pull the largest revenue volume from media at $37 billion, although its 6.6% growth pales compared to that of Google and Yahoo who logged 107% and 95.8% gains, respectively. AOL ironically slowed the Time Warner express as it was responsible for the company's meager 1.1% uptick in Internet revenue, according to Advertising Age's annual report.
Advertising on the Internet, the largest component of Web revenue in this report, continues to roll. Internet ad spending through May is up 9.1%, and is expected to settle in at 7.6% growth by the end of 2005, according to media monitoring service TNS Media Intelligence. Counting on this continued growth in the category, No. 6 News Corp. is looking to spend $1 billion on acquisition of Internet-related properties, to be grouped under its new Fox Interactive Media unit. The New York Times Co., No. 19 on the list, this February bought About.com from Primedia.
Movies, new to the report this year, logged growth of 8.9% to $26.3 billion among the Top 100. With product placement increasingly turning theatrical productions and TV programming into advertising vehicles, Ad Age's definition of media for this annual ranking has expanded. (Movie and TV placements are up more than 20%, to about $4 billion, according to researcher PQ Media). The operative definition of media in past reports has been information distribution systems supported by advertising. The meeting of Madison + Vine, though, has expanded this definition to information and entertainment distribution systems in which advertising is a key element of support.
Movies and their attendant home entertainment component certainly raise the bar for revenue required to enter this elite media list-from $209 million in 2003 to $243 million in 2004-as the category added four companies to the list-Sony Corp., DreamWorks SKG, Lions Gate Entertainment Corp. and Metro-Goldwyn-Mayer-while beefing up media totals for five others, all mainstays like Time Warner on the basis of their more "traditional" media properties.
Additionally, the expanded definition winnows out the largely information disseminators like Bloomberg, certainly a media company, but whose ad side is small compared with revenue generated from its terminal business. In addition to movies, fast-growing XM Satellite Radio Holdings is included due to its growing ad stream. Non-U.S. operations of media companies continue to be excluded where possible, as are non-media businesses like book publishing.
Print media, though up, were the least robust segments among the 100. Magazines grew 5.2% overall, to $20.33 billion, while newspapers advanced 5.1% to $34.96 billion. The ad portion of print in the first five months of 2005 is likely to ensure consistent growth in these media for the full year. Spending in consumer and Sunday magazines was up 8.3% (with 7.5% benchmarked by yearend); newspapers are expected to finish the year up 3.8%, according to TNS. The circulation side remains stagnant in both.
MEREDITH MOVES UP
No. 24 Meredith Corp. strengthened its position in the magazine category by snapping up Family Circle, Parents, Child, Fitness and Ser Padres from Bertelsmann's Gruner & Jahr USA early last month. Pro forma revenue for Meredith now slots it as the fourth-largest magazine publisher in the U.S., up from sixth last year. The sales effectively ended G&J's run in the U.S. consumer magazine market, its fortunes spiraling downward beginning in 2002 with the Rosie debacle.
Most major consumer magazine publishers experienced solid revenue growth in 2004. Rodale showed an 18.7% gain in magazine revenue and Advance Publications was up 10.2%. Gemstar-TV Guide International, No. 67, was the notable exception. Gemstar, its magazine revenue down 11.5%, is planning a complete revamp of its flagship TV Guide without its signature TV listings.
While newspapers were the most sluggish of all media, category revenue leader Gannett, No. 12 overall, was up a solid 7% in newspaper revenue. No. 34 Lee Enterprises significantly raised its profile in the category in June by completing its purchase of Pulitzer, ranked No. 61 a year ago. Lee's returns are shown pro forma in the report, as if it had owned Pulitzer both years.
Cable TV, including direct broadcast satellite, was strong once again in 2004, up over 13% on both the distribution and content sides of the business. Top cable operators are capitalizing on new revenue streams such as high-speed Internet, video on demand and digital phone service. Comcast saw a 38.5% increase in revenue from its high-speed data services in 2004, to $3.12 billion. Likewise, Time Warner and Cox Enterprises garnered revenue increases of 23.8% and 27.6%, respectively, from high-speed data services.
Cable networks have shown growth in ad spending of 6.6% through May of 2005 and are expected to round out the year with a robust 11.6% increase-the largest expected increase of all media sectors-according to TNS. Time Warner was the cable network category leader, drawing $8.35 billion from the medium, up 7.5%; Viacom, No. 2 overall, was second in the category at $6.70 billion, up 19.7%.
Despite its strong cable returns, Viacom lost $17.64 billion last year, largely a non-cash impairment charge from revising the value of its outdoor and radio businesses. Viacom is slated to be split in two by the end of the first quarter of 2006 with its cable networks and Paramount Pictures remaining under the Viacom name, and CBS and UPN TV networks, Viacom TV Stations Group, Infinity Broadcasting, Viacom Outdoor, Showtime, Simon & Schuster and Paramount Parks becoming units of CBS Corp.
OLYMPIC, POLITICAL BUMP
The Olympics and the presidential election after the mid-point last year kept broadcast TV revenues on an even keel as the category, up a heady 16.1% in 2003 among the Top 100, registered 9.3% growth in 2004 to $9.34 billion.
Among the Top 100, NBC Universal finished second to Viacom's CBS/UPN operations in total TV revenue but outpaced the rest in growth, up 20.9% to $7.49 billion. NBC's slump in this year's upfront sales, down about 30% from 2004 upfront levels, puts the network on a different path this year. In fact, this is the first year since 2001 that total TV upfront sales declined, the Cassandras citing everything from a malaise in programming to ineffectiveness of TV ads in a market of ad-skipping digital video recorders and changing viewing patterns. TNS predicts only 1.1% growth in network this year.
Radio showed a gain of 6.72% among the 100, to $10.49 billion. Shaking up the category is satellite radio, with No. 99 XM breaking into the Top 100 with revenue of $244.4 million, up 166%, and Spanish-language radio, with No. 27 Univision Communications surging to $328.4 million in radio that largely reflects revenue streams acquired in its 2003 buyout of Hispanic Broadcasting Corp. Growth prospects for radio advertising aren't high, though, as TNS sees a -0.1% shortfall for network and national spot radio (it doesn't monitor the larger local radio market) for full-year 2005.