100 Leading Media Companies Report

U.S. Media Revenue Jumped 8% to $287 Billion in a Year Filled With Private-Equity Scheming and Big-Game Hunting

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So what's the deal with media? Take your pick. The nation's 100 Leading Media Companies over the past year concocted more than a dozen major mergers, acquisitions and spinoffs with a total value topping $85 billion.
Media Family Trees

Private equity gets much of the credit (meaning a pile of debt and lots of challenges ahead). Shareholders last week approved media's most recent biggie, the $19.5 billion leveraged buyout of Clear Channel Communications, No. 16 in this issue's media ranking.

Amid all the mergers and acquisitions, the Media 100's U.S. media revenue jumped 8.1% to a record $287 billion in 2006.

TW nets big share
The 10 largest companies accounted for 55.6% of revenue collected by the Media 100 in 2006, according to the Ad Age DataCenter. Time Warner, which has held the No. 1 spot each year since 1995, collected 11.8% of Media 100 revenue -- nearly one of every eight dollars spent by advertisers and consumers on products and services from the top 100.

Time Warner is more than 100 times the size of the smallest ranked entry, Schurz Communications, a newspaper, broadcasting and cable operation with estimated revenue of $301 million.

But Schurz has scale in its own way: This is the first year that media companies needed more than $300 million to make Ad Age's ranking. The entry point for the Media 100 topped $200 million in 1999 and $100 million in 1986.

Ad Age has published the 100 Leading Media Companies report since 1981. In that first report (for calendar 1980), the top 100 media companies had U.S. media revenue of $29.5 billion -- less than what Time Warner collected in 2006. (Go to DataCenter at AdAge.com to see the original ranking, posted as part of this year's Media 100.)

The Media 100 report offers a bottoms-up view of media by tallying revenue from an array of products and services. This entails traditional media, internet services, cable providers and movies. Revenue sources include advertising, subscriptions, sales of movie tickets and DVDs, and fees from TV production and syndication.

Media 100 internet revenue last year rocketed 22.7%, ensuring its place as the fastest-growing revenue source. Google, No. 19 on the list, saw net U.S. ad revenue soar 70% to $4.1 billion.

Web, cable star
Internet had the strongest growth, but cable systems weren't that far behind. Cable-system-and-satellite revenue among the Media 100 jumped 14.8%, reflecting both higher prices and cable players' success in selling additional services.

Cable kingpin Comcast Corp. ranked No. 2 on the list. Three other major players -- DirecTV Group, Cox Enterprises and EchoStar Communications -- ranked among the top 10. Time Warner, meanwhile, owns 84% of Time Warner Cable, the second-largest cable system operator after Comcast.

Cable systems' heady growth can distort media-industry gains. Factor out cable system/satellite revenue, and the Media 100's growth rate drops to 5.5% (from 8.1% with cable).

Among traditional media, cable TV networks last year scored the highest increase (8.6%) at Media 100 companies; Yellow Pages (down 0.5%) and newspapers (up 0.4%) had the poorest showings.

And what of all those media deals?

Mergers and acquisitions
Private-equity-and-debt promoters drove mergers and acquisitions, with buyouts done or pending for Media 100 companies including Clear Channel, Univision Communications, Reader's Digest Association, Catalina Marketing and Cumulus Media. Tribune Co. and Cablevision Systems also are pressing ahead with deals to go private.

Beyond private equity, there wasn't a central theme to M&A. News Corp.'s Rupert Murdoch snared Dow Jones & Co. There was category consolidation, with Sirius Satellite Radio striking a deal to buy rival XM Satellite Radio. Some media giants sold non-core businesses; Walt Disney Co. spun off its ABC Radio stations and network to Citadel Broadcasting Corp.

Dealmaker John Malone made notable moves in the evolution of Liberty Media from a holding company to operating company -- if one with a hodgepodge of assets. This year, he traded a chunk of his Time Warner stock for the Atlanta Braves, a Time Inc. craft-publications business (Leisure Arts) and cash. He swapped his CBS Corp. shares for a Wisconsin TV station and cash.

In his biggest deal of the past year, Mr. Malone came to terms with Mr. Murdoch, agreeing to trade Liberty's 16.2% interest in News Corp. for a package including 38.5% of DirecTV Group. Mr. Malone, who helped build the cable industry before selling cable giant TCI, has decided it's time to install a dish.
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