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Cable, Satellite to Reap Ad Spending

Cable and satellite television will become the top communications segment in ad spending during 2002. According to Veronis Suhler & Associates Inc.'s 15th annual Communications Industry Forecast, cable/satellite will surpass entertainment and newspapers in terms of ad spending among the 12 categories tracked by the media merchant bank.

James Rutherford, the firm's executive vice president and head of investment banking, said Veronis Suhler projects that cable/satellite ad spending will reach $75.5 billion in 2002, owing primarily to increases in integrated media sales and digital cable.

Last year, cable and satellite television, at $63.4 billion, was the third-largest revenue generator in terms of ad spending among communications segments, behind entertainment (encompassing box office entertainment, recorded music and interactive entertainment) and newspapers.

Moreover, cable/satellite ad spending should grow at a compound annual rate of 11.6 percent from 2000 through 2005 and tally $23.8 billion in 2005, according to the Veronis Suhler forecast; its compound annual rate of growth was 19.7 percent from 1995 to 2000. Ad revenues for broadcast TV networks and stations, meanwhile, will slump 2.5 percent this year to $43.3 billion, Veronis Suhler said, citing the lack of political, Olympics and dot-com advertising. But a mostly live Winter Olympics from Salt Lake City, Utah, in 2002 should help contribute to an 8 percent ad-sales uptick.

"As in the past, growth is expected to heat up in 2004, a presidential election year," before slowing again in 2005, the firm added.

In addition, Veronis Suhler forecast continued growth through 2005 in consumers' overall media usage and their spending on cable/satellite TV, home video/DVD and box-office entertainment.

Media use, which hit 3,472 hours per year for the average consumer last year, should grow 5 percent by 2005 to 3,650 hours, or 10 hours per person, per day, Veronis Suhler reported.

The investment banker added that consumer spending on media will continue to rise - to $207 yearly on cable/satellite for the average consumer in 2001, up nearly 8 percent; $120 a year on home video/DVD, up nearly 10 percent; and $33 yearly on box office entertainment, up 0.3 percent.