Radio Saw Ad Spending Pick Up in First Half of 2002

When compared to the overall economy and to other industries, publicly reporting communications companies held their ground in 2001, amid a weak overall economy. Adjusted total revenues for publicly reporting communications companies inched up 2.5 percent to $261.7 billion in 2001, according to the 2002 edition of Veronis Suhler Stevenson Communications Industry Report.
“We believe some signs are now pointing toward a stabilized recovery of the industry,” said James Rutherfurd, executive vice president and head of investment banking at Veronis Suhler Stevenson. “What the CIR shows is the background to today’s environment: A technology meltdown and an economic recession that worsened following the September 11 terrorist attacks caused the first communications spending decline in decades. This combination of negative trends took a massive toll on the advertising industry, which trickled down into just about every communications sector.”
A recovery that was beginning to take shape in August 2001, but was blunted by the events of Sept. 11, has begun to re-emerge in 2002. Veronis Suhler Stevenson reports that radio became the first advertising-based medium to post an upswing in spending the first quarter of 2002, which was followed by broadcast television in the second quarter.
A slew of acquisitions and consolidation in the sector produced a mixed report for the 25 publicly reporting radio station networks and station broadcasters. Adjusted total revenues declined 1.6 percent to $6.8 billion, with 21.7 percent CAGR growth. Total operating income plummeted 30.1 percent to $698.8 million, but over the past five years, operating cash flow margins increased at a compound annual rate of 24.0 percent. Consolidation in the segment helped the value of assets, which increased 10.9% to $50.8 billion, while total operating cash flow increased 18.3 percent to $2.5 billion. The operating cash flow margin was 36.6 percent, higher than 2000 levels and slightly off 1999. Operating cash flow return on assets was 5.1 percent, a slight decline of 3.8 percentage points since 1998. The top three companies in the segment were Viacom, Clear Channel Communications and Westwood One.