Veronis Suhler Expects 2.9% Rise In Advertising

By: Katy Bachman (Mediaweek.com) Despite a sluggish first two quarters, media advertising is expected to end the year up 2.9%, to $177.1 billion, according to Veronis Suhler Stevenson's annual predictions, which were released Monday. And in 2003 the company believes media advertising will post a 5.3% gain, to $186.5 billion.

In total, media and communications spending is expected to recover by year's end and finish up 4.8%, to $610 billion, the report said.

The report credits a first quarter uptick in radio advertising spending and a surprisingly strong upfront buying season for network TV as positive indicators of growth for the second half of the year. But unlike the recovery following the 1991 recession, this one will be more modest, due to a mature high tech sector.

"That's why we're forecasting a recovery that, while it may be patterned on what occurred in the early '90s, probably won't be quite as vigorous -- and it will take longer to achieve," said James Rutherford, executive vice president and head of investment banking at Veronis Suhler. In addition, Veronis said its forecast was clouded by uncertainties such as future terror attacks, the reluctancy of companies to commit to new spending initiatives, and the recent wave of fraudulent accounting disclosures.

Broadcast TV advertising, including network, spot, local and syndication is expected to gain 4.1%, to $42.9 billion, driven by political and Olympics-related ad spending. A smaller gain of 1.9% is forecast for 2003.

Cable and satellite TV advertising are expected to increase by 14.7%, to $17.4 billion, with a similar gain of 15.2% expected for 2003.

The report said that radio will be up 3.2% this year, to $18.4 billion, and accelerate into a 5.2% gain for 2003.

Newspaper advertising will also increase this year, up 3.2%, to $52.3 billion, followed by a 6.4% increase in 2003.

Although it has been slower to recover, outdoor advertising should still end the year up 2.5%, to $5.3 billion. For 2003, Veronis forecast a similar gain of 2.2%.

Of the major media segments, only consumer magazines will sit out the rebound. Magazine advertising is expected to be down 3% this year, to $11.5 billion. It will be 2003 before the segment posts a 3% gain, the study reports.