Communications industry will rebound in 2nd half of 2002 from ind...

business-to- business media sectors, as well as increased consumer anxiety, slow growth in corporate spending and tentative investors.” Report said communications spending in U.S. would increase 4.8% to nearly $610 billion this year, up from $580 billion in 2001, and would grow at moderate 5.5% compound annual rate 2001-2006, reaching $760 billion, and slightly outpacing predicted 5.4% growth in nominal gross domestic product over same period. Forecast said positive indicators began to emerge in first 2 quarters of 2002 and would set stage for modest recovery in late 2002 and 2003. However, VSS foresaw communications dropping to 5th fastest- growing sector of U.S. economy for 2001-2006 period, after construction, services, finance, insurance/real estate and retail; it was 3rd in 1996-2001. VSS said compound annual growth rate of communications spending was 6.5% in 1996-2001. “We believe that all of these negatives will remain short- term influences and largely will have played themselves out by the end of this year,” said James Rutherfurd, VSS exec. vp and head of investment banking. “Then we foresee a return to an expansive attitude toward communication spending, though we aren’t projecting anywhere near a repeat of the super- heated growth of the late nineties.” VSS said consumer-end spending would drive communications growth in over next 5 years, rising compound annual rate of 6.5% through 2006 (7.5% in 1996-2001), due to solid expansion in cable and satellite TV, consumer Internet, videogame and box-office film makers. Institutional end-user spending will grow at compound annual rate of nearly 6% over next 4 years, VSS projects, compared with rate of 6.6% annually from 1996 through 2001. Institutional spending includes spending on TV programming; professional, educational and training media; business-to- business magazine circulation and trade-show exhibition space; and business information services. Advertising spending is expected to grow about 4% through 2006, down from its “heated” annual pace of 6% from 1996 through 2001. VSS said regardless of economic and social backdrop, consumers will spend more time with information and entertainment over next 5 years. Average American spent 3,570 hours with various forms of media in 2001, 1.4% increase over previous year. This number will expand at compound annual rate of 1.2% in forecast period, ending up at nearly 3,800 hours in 2006. Time spent with advertising-supported media accounted for about 3/5 of total, while consumer-supported media accounted for remaining 2/5. VSS said advertising recession and reaction to Sept. 11 sent broadcast TV advertising into tailspin in 2001. Ad expenditures dropped 8.6% to $38.7 billion for year, first decline in 10 years. However, this year, Forecast projects 4.1% rise in broadcast TV expenditure, to $42.9 billion. Total spending on broadcast- TV advertising will grow at compound annual rate of 3.8% from 2001 to 2006 and reach $49.6 billion, VSS said. Spending on cable and satellite TV advanced 9.7%, to $70.2 billion last year, VSS said. Total spending grew at compound annual rate of 11.7% from 1996 through 2001. This year, VSS projects, spending will increase 9.5%, to $76.9 billion. Overall expenditures for this year through 2006 will rise at compound annual rate of 7.1%, to $106.3 billion in 2006, making cable and satellite TV largest segment of media industry. Following 9 consecutive years of accelerating growth, radio ad expenditure declined 6.2%, to $17.9 billion, in 2001. However, VSS said local ad spending would rebound 3% to $14.6 billion this year, while national radio would post 4% growth, to $3.2 billion. From this year through 2006, spending will grow 6.2% on compound annual basis, reaching $24.1 billion.