Flash: Ad Sales Rise Nicely For Television Networks
High revenues spark rumors of possible takeovers of TV companies
THE broadcast television industry - generally looked upon as a wallflower just a few years ago - is suddenly finding itself at the top of corporate America's dance card.
With the total viewing audience for network TV either up or holding steady, and the United States economy on the rebound, advertisers are pouring dollars back into the mass media.
The upshot: The national television networks, with their steady cash flows from ad revenues, are now perceived as especially attractive takeover candidates.
``No question, they're now hot,'' says Arthur Gruen, of Wilkofsky, Gruen Associates Inc., a New York consulting firm that follows media companies. ``Hardly a day goes by without another new rumor about the takeover of a network.''
And given rising ad revenues, ``it wouldn't surprise me'' if some of the networks ``were to change hands sometime in the next year,'' Mr. Gruen says.
The economist sees advertising dollars for broadcast TV - which include the networks and local stations but not cable TV - increasing at a steady rate. Advertising dollars will finally come out at around $28.5 billion for broadcast television in 1994, he says, up from $26.6 billion in 1993. Advertising revenues should reach $29.6 billion in 1995, Gruen adds.
Advertising on cable television is also expected to increase, he says, from $2.5 billion in 1993 to $2.9 billion this year and $3.2 billion in 1995.
But ad revenues are not just climbing for television. According to projections by Veronis, Suhler & Associates, a New York investment-banking firm, total advertising revenues for all communications media - including networks, local television stations, cable TV, radio, magazines, and newspapers - should reach about $96 billion next year, up from about $91 billion this year and some $76 billion in 1991.
And barring a new economic downturn in the US, total advertising revenues could top $114 billion by 1998, the company predicts.
Gruen, who conducts economic projections for Veronis, Suhler & Associates, says the projected increase in advertising for broadcast television between now and next year is actually much greater than it appears. Although TV ad revenues rose from $26.6 billion in 1993 to $28.5 billion this year, 1994 must be considered a ``special situation,'' he says.
``The Winter Olympic Games earlier this year, plus the heavy advertising for congressional political races now in progress in many parts of the US'' are events that occur only every two to four years, Gruen says. Thus, next year represents somewhat of a more ``regular'' television season in terms of advertising, he explains.
``Construction for cable-television systems has been basically completed around the United States,'' Gruen says. ``So cable-TV ratings have begun to stabilize. Thus, there is a new equilibrium between broadcast TV and cable,'' which tends to help network viewing.
In recent weeks, speculation has mounted about mergers or takeovers involving three networks: NBC, a unit of the General Electric Company; CBS, controlled by investor Laurence Tisch; and ABC, a unit of Capital Cities/ABC Inc.
Both media magnate Ted Turner, of Turner Broadcasting System Inc., and The Walt Disney Company, for example, are reportedly on the prowl for a merger with a national network.
In addition, Time-Warner Inc. and Paramount Communications, which Viacom International Inc., recently acquired, have been working on start-up plans for new national networks.
Dennis Leibowitz and John Whittier, who follow broadcasting for investment house Donaldson, Lufkin & Jenrette Inc. in New York, rate the industry as ``favorable'' in terms of investment opportunities.
Ironically, advertising gains for broadcast television come despite generally lackluster reviews about most of the new programs listed in this year's fall schedule.
But TeleVest, a media unit of advertising agency D'Arcy Masius Benton & Bowles Inc. in New York, concludes in a new study that ``network television is in much better shape than most people think.''
The four national networks - NBC, CBS, ABC, and Fox - are launching 29 new prime-time series this season, spanning 22.5 hours of programming, TeleVest notes.
Several highly popular shows from past seasons - such as ``The Simpsons'' and ``Melrose Place'' on Fox, ``Coach'' on ABC, and ``Frasier'' and ``Wings'' on NBC - have been shifted to new nights to help boost audience shares for their respective networks.