Ad Revenue Slumps in Third Quarter

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As the economy continues to tank and consumers tighten their purse strings, advertisers are also pulling back and companies that depend on ad dollars to punch up their bottom lines are feeling pinched.

Several media companies reported small ad-sales gains, were flat or even dropped in the third-quarter compared to a year ago, and the outlook for the next year isn’t that great either. Even the 2008 Summer Olympics and the uptick in political ad dollars cable operators experienced in the third quarter weren’t enough to offset the drop in the core business.

Comcast Spotlight’s local cable ad revenue dipped 10% in the third quarter to $374 million, which was worse than the 4% to 5% decline the company experienced in the first half of the year, Comcast chief financial officer Michael Angelakis told analysts late last month. Comcast’s programming networks suffered from the Olympics, which ran on NBC Universal networks. But Angelakis said that while the market has softened, pricing and demand for Comcast’s networks are holding up well.

Charter Communications local ad sales revenue inched up in the third quarter. The MSO posted a 4% lift in sales to $80 million, up from $77 million a year ago. For the nine months, Charter’s ad sales revenue is up 3.2% to $223 million, according to the company’s third-quarter report.

Mediacom’s ad sales revenue slipped 3% in the quarter thanks in part to the tanking automotive category, according to the operator. The company’s third-quarter totals were also hurt by the fact that there was one less week in the broadcast calendar than during the same period in 2007, Mediacom said.

Time Warner Cable’s third-quarter ad revenue grew 1% to $224 million, up from $221 million in the year-ago period. The company credited the boost mainly to increases in political advertising, although that revenue was partially offset by drops in core segments at the national, regional and local levels. Ad revenue for the nine months of 2008 was up 3% from the same period in 2007 to $654 million.

“Political is big for us and it’s been basically buoying that business,” said Time Warner Cable chief operating officer Landel Hobbs told analysts. “We’ve been hit hard, of course, automotive, financial services. Not really going to lean into the fourth quarter but you know what’s happening in the world out there. Advertising is continuing to be extremely soft -- if anything, it actually has gotten worse in the third quarter -- and as much as political buoyed it, that will be gone. Underlying trends in primarily all of the advertising sectors for us are very weak.”

Insight Communications posted third-quarter advertising revenue of $10.8 million, down from $11.1 million posted a year ago and off from the $11.1 million the MSO reported in the second quarter of 2008. The average monthly advertising revenue per basic customer for the third quarter was $5.17. It was $5.33 per basic customer in the second quarter and $5.61 per basic customer in the third quarter of 2007.

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