Bright prospects seen for cable TV, new media

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Cable TV and new-media advertising are the only sizable media segments that will see "consistent double-digit gains over the next five years," according to Veronis, Suhler & Associates' annual communications industry forecast.

Overall, the communications industry is projected to grow at a 7% compound rate between 1995 and 2000, reaching $353.3 billion by the end of this period. The gross domestic product over the same period is only expected to grow at a 5.5% annual compound clip.


"We're not forecasting an economic recession for the country through the year 2000," said Veronis Suhler President John Suhler. "It will be a period of sustained, stable growth."

He added, "Regarding ad spending, magazines will gain market share, broadcast television will be losing share and radio will hold its own. New media and cable will do substantially better than average in gaining market share."

Newspapers will continue to lose share, he said, even though they will pick up the pace to a 5.5% annual growth rate, hitting $65.8 billion by 2000. That's compared to $44.7 billion at the start of the decade, when the medium grew at only a 2.4% annual rate between 1990 and 1995.

For local TV stations, the forecast calls for a 6.2% annual growth rate. That would take station ad revenues to $25.6 billion by 2000.

While radio ad growth has been at almost a 10% level since 1993, it's forecast to drop to a 7.2% compound annual growth rate, spurred by consolidation of station ownership. Revenues will reach $15.4 billion by 2000.


Veronis Suhler also predicts the annual number of hours viewers tune in to network TV will continue to erode, with cable TV and independent TV stations picking up share. The network total is expected to decline to 775 hours per person by 2000, from 836 last year, while ad-supported cable is expected to increase to 550 hours per person, up from 468 hours last year. The Internet and online services also will be taking up more of people's time. Hours spent in cyberspace are predicted to increase to 28 per person in 2000, from 7 last year.

Other highlights:
-Network TV advertising will grow at a compound annual rate of 5.9% over the 1996-2000 period. By 2000, network TV ad revenues should hit $15.6 billion.

-Total magazine industry revenues, including advertising and circulation, will reach $31.5 billion by 2000, a 6.2% annual growth rate. Advertising in consumer magazines will grow an estimated 7.5% to $12.5 billion.
Business-to-business titles will see their compound annual growth rate perk up to 5.9%, reaching $10.2 billion by 2000.

-Cable--including direct broadcast satellite and wireless cable--should increase at a 13% compound annual rate through 2000, rising to $9.9 billion.

Ad spending on the Internet and commercial online services should hit $2.1 billion by 2000, a growth rate of 111.2%.

"The money being spent on online services so far is disproportionate to the overall economic growth rate of the country," Mr. Suhler said.

Copyright August 1996 Crain Communications Inc.

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