U.S. TV advertising trends remain strong

Analyst sees 5% growth, compared to last year's 15.5% decline

NEW YORK -- TV advertising trends remain so strong in the U.S. that Barclays Capital on Thursday raised its 2010 TV forecasts despite modestly lowering total ad spending estimates.

For total U.S. advertising, analyst Anthony DiClemente now expects 5% growth this year, down from 5.5% previously, but much better than last year's 15.5% decline. He cited weaker momentum at many traditional media categories, including radio, magazines and newspapers.

Meanwhile, TV and the Internet remain key growth drivers.

DiClemente now predicts spending on national network TV (including Olympics) to grow 10.5% this year (up from 9.8% previously), local broadcast TV (including political) to grow 24.5% (versus 23.3%) and national cable TV to improve 7.5% (compared with 6.5%).

According to Barclays, companies that stand to benefit the most from these trends are Scripps Networks, whose stock the firm rates "overweight," and CBS ("neutral").

Internet/online advertising spending should jump 11.8% rather than his previous 8.9% estimate, DiClemente said.

While investors have expressed concerns about weakening economic growth as of late, DiClemente said: "The strengthening automotive sector bodes well for U.S. advertising, as auto represents one of the largest categories of total U.S. advertising."

He also argued there may be upside to TV ad expectations due to the Supreme Court's decision earlier this year to essentially lift restrictions on corporate spending on federal candidate elections. Said DiClemente: "The pool of potential political advertisers is likely larger than ever before. While there is a lack of visibility here, we believe risk remains to the upside."
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