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(July 10, 2001) -- Another industry observer has lowered his 2001 ad spending forecast, predicting lower revenues in light of the continued economic weakness.

Lehman Brothers advertising industry analyst Kevin Sullivan revised his U.S. total to forecast a drop of 0.3% from a 2% rate of growth, and that non-U.S. spending would grow 3%, down from a rate of 4% growth.

According to Mr. Sullivan's U.S. forecast, magazine and television ad spending will each decline 3%, while newspaper spending will drop 2.5%. Meanwhile, spending will grow 5% on cable TV, 3% on outdoor and 1% on radio.

"Although '01 looks like a 'lost year,' we expected the ad market to firm some next year due to a stronger economic outlook, Olympics and local and congressional elections," Mr. Sullivan said in a report issued today. His 2002 forecast calls for 4.5% U.S. growth (down from 5.6%) and 5% growth overseas, down from 6%.

Mr. Sullivan's forecast is the latest industry reevaluation to follow the revised outlook by Universal McCann's senior vice president Robert Coen, the U.S. industry's top forecaster, who dropped his projection from 5.8% growth last December to 2.5% at his midyear update (see related feature story The Ad Economy: "Stormy and Poor").

UBS Warburg's Christopher Dixon has projected 2% growth in 2001, while Merrill Lynch & Co.'s Lauren Rich Fine has called for a 0.7% drop in spending. -- Mercedes Cardona

Copyright July 2001, Crain Communications Inc.

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