Communications Industry Posts Fourth Consecutive Year of Double-Digit Revenue Growth, According to 16th Annual Veronis Suhler Communications Industry Report.NEW YORK--(BUSINESS WIRE)--Jan. 4, 1999-- Acquisitions a Key Driver for Asset and Revenue Growth in 1997; Technology Boosted Business-to-Business Market, While Increases in Institutional and Consumer Spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. Benefited All Media VS&A Annual Industry Scorecard Tracks Performance of 469 Public Media Companies in 13 Segments: Overall Revenues Reach $227.5 Billion in '97; Industry Growth Well Ahead of Gross Domestic Product On the strength of an active acquisitions market, a strong advertising climate, and increased spending on business information and new media, revenues of publicly reporting companies in the media and communications industry communications industry, broadly defined, the business of conveying information. Although communication by means of symbols and gestures dates to the beginning of human history, the term generally refers to mass communications. rose 12.3% to 227.5 billion in 1997, the fourth consecutive year of double-digit growth. Total industry assets in 1997 increased 13.1%, to $400.3 billion. So reports the 16th Annual Veronis Suhler & Associates Communications Industry Report, just released by the investment banking firm. VS&A's Communications Industry Report (CIR (Committed Information Rate) In a frame relay network, the average transmission rate in bits per second (typically Kbps) for a virtual circuit. It defines the maximum rate that the network can handle under normal conditions. ) is the most comprehensive annual compilation Compiling a program. See compiler. of financial data for the communications industry, tracking 469 publicly reporting companies in 13 industry segments - television broadcasting, radio broadcasting The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , subscription video services, entertainment (film, music, interactive), newspaper publishing, consumer books and consumer magazines, online, business-to-business communications, professional and educational publishing, business information services See Information Systems. , advertising agencies, and speciality media (directory publishing, out-of-home media, direct marketing). Each segment analysis includes five-year company data on revenue, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , assets, and depreciation and amortization. The CIR's five-year retrospective LAW, RETROSPECTIVE. A retrospective law is one that is to take effect, in point of time, before it was passed. 2. Whenever a law of this kind impairs the obligation of contracts, it is void. 3 Dall. 391. highlights the role of acquisitions and international sales in the growth of communications industry assets, revenues and operating cash flow since 1993. From 1993-1997, assets for public media companies grew at a 20.0% compound annual growth rate (CAGR CAGR See: Compound Annual Growth Rate ), from $193.0 billion in 1993 to $400.3 billion in 1997. Over the same period, revenue grew at a CAGR of 12.5%, while operating cash flow (OCF (1) (Open Container Format) See OPS. (2) (OpenCard Framework) A smart card specification from the OpenCard Consortium. ) increased at a 12.6% compound annual rate. In contrast, nominal U.S. Gross Domestic Product rose 5.4% during the same five years. Operating Cash Flow Rebounds in Key Segments Industry segments that showed dramatic revenue growth in 1997 were led by Consumer Online Services, up 47.4% to $3.8 billion (and 72.1% over the five-year period) -- fueled by subscription growth as the price of both computers and online subscriptions dropped. Radio broadcasting revenue grew 33.4% to $3.4 billion in 1997, followed by Filmed Entertainment (24.5% to $33.2 billion), Subscription Video Services (17.7% to $34.3 billion), and Advertising Agencies (15.0% to $14.2 billion). Total industry revenue grew at a faster rate in 1996 (15.7%) than in '97 (12.3%), reflecting the record-breaking volume of merger activity in 1996 -- $137 billion vs. $104 billion in 1997. In 1997, however, operating cash flow grew at a robust 18.1%, up from 1996's 14.0% rate. The improved OCF reflects a consolidation of gains resulting from the 1996 M&A high-water mark high-water mark n. 1. Abbr. HWM A mark indicating the highest level reached by a body of water. 2. The highest point, as of achievement; the apex. . OCF grew significantly in several segments in which M&A traffic has been heavy since 1995 -- including 52.4% for advertising agencies, 48.2% for radio broadcasting, 36.1% in business-to-business communications. Newspaper publishing, benefiting from strong advertising and reduced paper costs, saw a 35.3% growth in OCF. Operating cash flow margins, which do not reflect the depreciation and amortization costs of acquisitions, rose to 21.3% in 1997, from an industry average of 20.2% in 1996. OCF margins in 1997 rose to 34.7% for subscription video services, up from 33.3% in 1996; 31.3% in radio broadcasting, up from 28.2% the year before; to 25.7% for business information services, up from 25.6% in 1996; and to 14.8% for advertising agencies, up 11.2%. Newspaper publishing posted the strongest one-year OCF margin rise, to 25.6% from 20.7 in 1996 -- an advance again attributable to the advertising recovery and the fall of paper prices. "The recent rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective in operating cash flow in key segments signals that companies are consolidating the benefits of their acquisitions and achieving economies of scale as their revenues increase," said John Suhler, president and co-founder of Veronis, Suhler & Associates. "A highly active acquisition market has obviously pushed revenues upward and we expect to see this continue into 1999," he said, noting that regulatory conditions and consolidation trends are likely to favor media industry transactions across a number of segments. Mr. Suhler further noted that strong corporate profits have spurred advertising investment in all media, while institutional spending on business information services, training, business-to-business communications, and trade shows have driven the value of media and information companies to record highs. "Fueling acquisitions is the fact that information and entertainment have become two of this country's most valuable commodities. The demand for both is driving the communications industry's growth at a rate that well outstrips the U.S. economy as a whole." 18 Firms Top $4 Billion in Revenue; America Online See AOL. Leads 50 Fastest-Growing Companies The new CIR reports that 18 communications companies Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. topped the $4 billion revenue mark in 1997, up from just seven in 1992. Fifty-eight generated revenues over $1.0 billion, representing over 12% of the 469 companies included in the CIR. Time Warner was the industry leader with 1997 revenues of $22.3 billion, followed by Walt Disney Noun 1. Walt Disney - United States film maker who pioneered animated cartoons and created such characters as Mickey Mouse and Donald Duck; founded Disneyland (1901-1966) Disney, Walter Elias Disney at $17.5 billion, Bertelsmann A.G. at $9.5 billion, Viacom ($9.1 billion), Sony ($8.3 billion), News Corp. ($7.6 billion), Tele- tele- word element [Gr.], operating at a distance; far away. tele- or tel- pref. Distance; distant: teletherapy. tele- word element. [Gr. Communications ($6.8 billion), Thompson Thompson, city, Canada Thompson, city (1991 pop. 14,977), central Man., Canada, on the Burntwood River. A mining town, it developed after large nickel deposits were discovered in the area in 1956. Corp. ($5.8 billion), Seagram/MCA-Universal ($5.6 billion), and Polygram, N.V. ($5.5 billion). Interestingly, six of the top ten represent largely foreign ownership. Of the 50 largest companies, America Online was the fastest-growing over the 1993-97 period, with huge subscribership increases boosting revenues 138.6% between 1993-1997, to $1.7 billion. Next in five-year revenue compound growth were Hollinger, Cablevision Systems, and Viacom, all of which grew via acquisitions. Hollinger acquired Southam, Cablevision Systems made a number of acquisitions, and Viacom acquired Paramount Communications Paramount Communications Media and communications corporation. It was founded (as Paramount Pictures Corp.) by W. W. Hodkinson in 1914 as a film distributor. It became a motion-picture company two years later and won attention with stars such as Mary Pickford, Gloria and Spelling Entertainment. Business information services dominated top rankings in operating cash flow returns on assets. Dun & Bradstreet led at 43.4%, followed by Sprint, Reuters, Equifax, and the Washington Post Company, each of which had operating cash flow ROAs in excess of 30%. Operating cash flow margins were highest among subscription video services providers, led by Comcast (47.6%), U.S. West (42%), Cox Communications Cox Communications is a privately owned subsidiary of Cox Enterprises providing digital cable television and telecommunications services in the United States. It is the third-largest[2] cable television provider in the United States, serving more than 6. (37.9%), and Tele-Communications (36.4%). In fifth place was Gannet gannet: see booby. gannet Any of three oceanic bird species (family Sulidae) closely related to the booby. Gannets are found in the North Atlantic, where they are the largest seabirds, and in temperate waters around Africa, Australia, and New (35.5%). Retail Distribution Turbulence turbulence, state of violent or agitated behavior in a fluid. Turbulent behavior is characteristic of systems of large numbers of particles, and its unpredictability and randomness has long thwarted attempts to fully understand it, even with such powerful tools as for Consumer Book Publishing book publishing. The term publishing means, in the broadest sense, making something publicly known. Usually it refers to the issuing of printed materials, such as books, magazines, periodicals, and the like. and Recorded Music recorded music n → música grabada Consumer book publishing and recorded music -- two segments undergoing limited or negative growth -- have been facing transformation of their retail distribution channels. The book industry is feeling the effects of improved inventory management by the superstores This is a list of superstores by country. Multi-national
Recorded music underwent conflicting developments in 1997. While strong releases and a resurgent re·sur·gent adj. 1. Experiencing or tending to bring about renewal or revival. 2. Sweeping or surging back again. Adj. 1. singles market fueled retail sales, consolidation led to an upswing Upswing An upward turn in a security's price after a period of falling prices. in product returns, and weak overseas currencies artificially depressed overall revenues. Time-Warner and PolyGram, which together accounted for over 96% of segment revenues, had opposing results. While Time-Warner suffered from high returns and weakness in the club market, PolyGram enjoyed a series of hit releases and benefited from the company's 1996 restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). . Recorded music's revenues rose 3.5%, while operating income and cash flow dropped and margins fell from five-year highs in 1996 to five-year lows in 1997. -0-
One Year Growth Rates for the Communications Industry
1997 Annual Annual Annual Annual 1997
Revenue Growth Growth Growth Growth OCF
of of of of
($ billion)Revenue Assets OCF OI ROA
(%) (%) (%) (%)
Television Broadcasting $30.1 13.0% 18.5% 21.1% 21.6% 10.6%
Radio Broadcast 3.4 33.4 88.8 48.2 46.9 8.8
Subscription Video
Services 34.3 17.7 11.6 22.5 20.8 11.0
Entertainment 48.4 10.9 1.9 3.2 0.6 9.5
Filmed Entertainment 33.2 10.9 2.4 6.0 9.2 9.0
Recorded Music 8.6 3.5 -2.9 -12.4 -19.5 11.5
Interactive
Entertainment 6.5 22.5 6.4 23.5 -21.6 9.4
Newspaper Publishing 24.2 9.3 20.1 35.3 38.2 26.1
Consumer Book Publishing 3.7 -16.4 -9.3 -32.7 -35.8 9.8
Consumer Magazine
Publishing 9.5 2.1 1.5 16.6 19.0 17.6
Consumer Online 3.8 47.4 11.0 NC NC NC
Business to Business
Communication 2.6 9.7 36.3 36.1 43.2 29.1
Professional/Educational
Publishing 14.3 8.8 11.4 1.5 -16.9 12.2
Business Information
Services 28.2 13.3 9.0 14.0 11.6 23.0
Advertising Agencies 14.2 15.0 7.1 52.4 66.4 11.0
Specialty Media/Marketing 10.8 14.2 29.8 40.2 30.6 21.0
Communications Industry
Total 227.5 12.3 13.1 18.1 15.0 12.8
Five Year Growth Rates for the Communications Industry
1993-97 1993-97 1993-97 1993-97 1993-97 94 v.
CAGR CAGR CAGR CAGR OCF 97
Revenue Assets OCF OI Margin ROA
(%) (%) (%) (%) Change (+or-)
Television Broadcasting 10.4% 27.1% 14.8% 11.6% 3.6 pts -6.4
Radio Broadcasting 23.8 51.9 33.7 43.5 8.3 -5.2
Subscription Video
Services 16.5 23.5 12.4 1.1 -5.4 -2.7
Entertainment 13.8 15.8 6.7 1.0 -3.7 -3.7
Filmed Entertainment 24.5 25.9 25.7 25.1 0.4 -2.7
Recorded Music 3.1 0.0 -0.1 0.1 -2.0 -1.5
Interactive
Entertainment -3.0 6.3 -18.3 -51.6 -11.9 -8.1
Newspaper Publishing 8.0 9.8 14.6 15.9 5.4 2.9
Consumer Book Publishing -2.8 -0.9 -13.0 15.1 -5.1 -6.6
Consumer Magazine
Publishing 3.8 2.1 6.9 7.9 1.7 3.2
Consumer Online 72.1 79.3 NC NC NC NC
Business to Business
Communications 9.2 11.0 18.7 22.2 5.1 7.7
Professional/Educational
Publishing 11.0 15.6 11.3 2.9 0.2 -1.8
Business Information
Services 15.3 18.3 17.2 17.5 1.7 -2.8
Advertising Agencies 12.7 13.5 20.4 22.2 3.4 1.9
Specialty Media and
Marketing 13.9 29.2 15.4 11.5 1.0 -7.3
Communications Industry
Total 12.5 20.0 12.6 8.4 0.1 -3.3
Note: OCF = Operating Cash flow OI = Operating Income
CAGR= Compound Annual Growth Rate
OCF/ROA=Operating Cash flow / Return on Assets
About Veronis, Suhler & Associates Founded in 1981, Veronis Suhler & Associates Inc., is the leading independent investment bank specializing in the media and communications industry. VS&A has completed more than 425 transactions exceeding $22 billion in value. To purchase the 16th annual Communications Industry Report for $995, call (212) 935-4990 or visit the Veronis, Suhler Web site at www.vsacomm.com. |
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