Private-Equity Firm Releases Communications Forecast

NEW YORK: Leading private-equity firm Veronis Suhler Stevenson (VSS) says that communications will be the third fastest-growing sector of the U.S. economy from 2009 to 2013, despite a 1-percent decline in spending this year to $882.6 billion.

VSS reports that total communications spending will grow 3.6 percent per year over the next five years to more than $1 trillion in its newest Communications Industry Forecast (CIF), which tracks advertising, consumer spending, marketing and other segments in the U.S. media industry. The report points out the contraction in the traditional ad market in the last two years and forecasts that the institutional sectors and various alternative media segments will drive overall communications spending for the next five years.  

Segments that are growing, VSS says, include the Internet, subscription television, mobile advertising and content, branded entertainment, business information, video games, business-to-business electronic media, event marketing, trade shows and e-books. The sectors that are contracting, VSS notes, include broadcast television, home video,  newspapers, consumer magazines and recorded music.

“The prolonged economic downturn has accelerated changes already under way in the communications industry," said Jim Rutherfurd, the executive VP and managing director at VSS. "Notwithstanding significant declines in traditional media, the industry taken as a whole will continue to show relatively solid performance compared to the overall economy. These changes are driven by a confluence of factors—primarily the growth of digital end-user businesses and the shift from broad reach traditional advertising to targeted alternative advertising and marketing services.” 

John Suhler, co-founder, president and general partner of VSS, added: “While we have seen consumer media usage remain generally flat over the past year, the way in which consumers are spending their time continues to evolve. No longer are newspaper and magazine subscription purchases and network prime-time viewing the norm. Instead, they are declining and consumers are spending more time with media which they support and pay for as opposed to ad-supported media. “This development is a culmination of two decades of this secular shift towards consumer-controlled media, and shows no signs of slowing.”