VSS: Communications Spending to Reach $1.1 Trillion in 2011

NEW YORK: U.S. communications industry spending is set to grow 4.1 percent this year to reach $1.12 trillion, and will be the fourth-largest economic component in the country by the end of 2015, according to a new forecast from Veronis Suhler Stevenson (VSS).

According to the 25th edition of the VSS Communications Industry Forecast 2011-15, the communications segment is set to expand at a 5.5 percent compound annual growth rate (CAGR) in the 2010-15 period. By the end of 2015, the communications industry will be the eighth-fastest-growing and fourth-largest U.S. economic component.

Growth will be driven primarily by the rapid convergence of computer, Internet and wireless mobile technologies, which are fueling the transformation of the media landscape and leading to new industries, platforms, channels and changes in behaviors. Entertainment and leisure media has an expected 5.6 percent CAGR from 2010 to 2015. This sector is expected to expand from $270.36 billion in 2010 to $355.74 billion in 2015.

VSS expects spending in the advertising revenue stream to grow 2.5 percent in 2011 to $188.16 billion, with a 6 percent CAGR gain in the forecast period to reach $245.29 billion. Broadcast TV will remain the largest advertising segment. Among the institutional end-user segments, TV programming, cable license fees and TV station retransmission fees will grow at a CAGR of 7.5 percent from 2010 to 2015.

“While there are instances of declines and decelerated growth—largely in the more traditional segments of the communications industry—there is a convergence taking place in which everything digital continues to gain greater influence, scope and relative revenue mix, neutralizing the general decline of traditional media,” said John Suhler, co-founder, president and general partner of VSS. “business and professional information and services continues to be a fast-growing sector, in part, because it has long embraced digital content and related software services and delivery. Also, the sectors that held up well in the last economic downturn—targeted media, business and professional information and services, education and training media and services, and entertainment and leisure media—are all expected to record solid growth in the forecast period, thanks in large part to their migration to digital platforms and delivery methods.”