Radio Saw Ad Spending Pick Up in First Half of 2002

Radio Saw Ad Spending Pick Up in First Half of 2002
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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.