Zenith Media Publishes Analysis of Top 20 North American Media Owners

  • by September 27, 2000
Advertisers looking for help in navigating America's increasingly congested media freeway have a new roadmap to consult: Zenith Media, one of the leading global media services agencies, has just published a first-time analysis of Top North American Media Owners.

"Whether you are a large national advertiser or a regional buyer, or whether your spending is confined to specific vertical markets, chances are that you've dealt with one or more of the Top 20, even if you didn't always know it," said Richard Hamilton, CEO of Zenith Media-USA.

Mr. Hamilton noted that the Top 20 companies generated $84.5 billion in media-related revenues in 1999, a nine percent increase over 1998, spurred largely by the mega-mergers of Time Warner and AOL and between Viacom and CBS. "The tremendous push towards convergence has certainly made our jobs as media buyers and strategists more challenging," he explained.

Aside from looking at the financial performance at each of the Top 20 (revenues by division and by market, operating profits, return on capital, and even earnings per share), the book considers total advertising spending in North America across all major media. Zenith projects this number to reach $157.5 billion by 2002, a 21% increase over 1999, but still a significant softening from prior increases "against the backdrop of a slowing economy and dot-com consolidation." For perspective, overall ad spending was only $76.7 in 1988.

How significant is the consolidation trend, which as Zenith notes, has become "unstoppable", not only in terms of content, but also in distribution channels (e.g., networks, cable outlets, stations)? Besides the aforementioned deals, the report notes the recent alliance between NBC and PAX TV; the acquisition by Clear Channel of SFX Entertainment, the country's biggest event promoter; and Tribune Company's takeover of Times-Mirror.

"As multimedia companies swallow up more of their competitors, we may end up with higher prices in the affected media," Zenith suggests. Mr. Hamilton adds that "while consolidation provides more cross-selling opportunities, it greatly increases the complexity of determining value and strategy for those who have to allocate media dollars."

As a buying agent for companies that may spend hundreds of millions of dollars on media annually, Mr. Hamilton acknowledged that a narrower field comprised of dominant owners across multiple platforms "has definitely made it harder to negotiate, as well as to analyze all of the component media for relative cost and value. Obviously, advertisers want to see healthy competition in the marketplace. Our view is that the ongoing consolidation should be watched closely to preserve an open market."

HIGHLIGHTS ON AD SPENDING: SOFTENING AHEAD

While overall ad spending numbers continue to grow, Zenith projects a significant slowdown ahead. In the television marketplace, Zenith projects total ad spending to reach $57.4 billion in 2001, a 5% increa

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