After double-digit percentage declines in 2009, both radio and television are seen having up years in 2010, according to the latest forecast from Veronis Suhler Stevenson (VSS). Over the next few years, VSS sees television outperforming radio.
VSS predicts total Communications Industry spending is on pace to increase 3.5% in 2010 and post a compound annual growth rate (CAGR) of 6.1% in the 2009-2014 period to $1.416 trillion, driven by a gradual economic recovery, advances in digital technology, and secular trends impacting the entire industry landscape.
“There will be a longer and slower economic recovery during the expansion period covered by the forecast compared with previous expansions because of the breadth and depth of the recession,” said John Suhler, Co-Founder, President and General Partner of VSS, a private equity firm focused on communications industries. “We expect the Communications Industry will only slightly outperform nominal GDP over the next five years. Advertising and marketing investments, historically the drivers of Communications growth during recoveries, are expected to be more muted due to the shift away from traditional media outlets to more targeted media.”
Source: VSS communications Industry Forecast 2004-2014
Looking back, VSS says total expenditures on broadcast TV fell 12.1% in 2009 to $43.15 billion, due to the weak advertising market and the virtual collapse of the automotive category. Ad spending on network and local TV dropped 15.1% to $38.28 billion in 2009. But there was a bright spot, with spending on TV-associated online and mobile broadcast platforms up 18.7% to $4.17 billion. Also, retransmission consent fees rose 47.6% to $695 million.
Total broadcast TV expenditures are anticipated to rise 8.4% in 2010 to $46.76 billion, fueled by midterm election spending, a recovery in the automobile and retail markets, an expansion of broadcast’s online and mobile offerings, and continuing increases in retransmission fees. Overall spending will register a CAGR of 6.1% from 2009 to 2014, VSS predicts, with spending reaching $58.05 billion in 2014.
Radio also suffered a tough year in 2009. VSS calculates that total spending on radio – including broadcast, satellite, online, and mobile advertising and content – dropped 16.2% to $17.12 billion, “as the protracted economic recession affected key advertising categories, including automotive, retail and financial.” Advertising expenditures on broadcast radio plummeted 19.4% in 2009 to $14.25 billion.
Better days are ahead, but VSS predicts that radio growth will trail nominal GDP growth over the five-year period through 2014. The firm predicts that total spending on broadcast and satellite radio will rise 3.3% in 2010 to $17.68 billion. “Broadcast & satellite radio will rise at a 5.0% CAGR from 2009 to 2014, reaching $21.85 billion, which will still be less than 2007 levels, as consumers begin listening to radio via new digital formats, satellite radio subscription prices rise, and online and mobile platforms post double-digit gains, the forecast stated.
The VSS Forecast has been issued annually since 1986. Information is available at VSS.com.
RBR-TVBR observation: Yes, there’s a recovery, but what VSS points out is that targeted advertising is taking share away from traditional media outlets like radio and TV and growing faster than “old media.” That’s not all bad news for broadcasters, since you can share in that “new media” growth by using your strong brands to launch targeted online and mobile platforms.