Forecasters: Happy Cable New Year

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New York -- 'Tis the season to make forecasts, and
McCann-Erickson WorldGroup, The Myers Group LLC and Zenith Media Services all unwrapped
theirs last week.

McCann-Erickson and Zenith chose the annual PaineWebber
Inc. media conference at the McGraw-Hill Building here, where executives from both ad
agencies offered their predictions in back-to-back presentations.

Robert Coen, senior vice president and director of
forecasting for McCann's global-media-services operation, Universal McCann, predicted that
network cable should grow 15 percent to $8.04 billion in 2000, on top of its 20 percent
jump to nearly $6.7 billion this year.

The 1999 figure is even ahead of Coen's revised
projections, made this past June, when he expected cable to finish at $6.7 billion, up 15
percent.

Cable is the biggest gainer among measured media except for
the Internet, which Coen projected at $3.22 billion next year, up 75 percent for the
second straight year (from $1.84 billion).

The "Big Four" broadcast-television networks'
take should climb 9 percent to $16.02 billion, compared with a 7 percent uptick to $14.69
billion this year, he added.

Generally speaking, Coen observed, "The economy will
be good [in 2000], and Olympic [Games] and election activities will add further fuel to
the rising ad-spending trends. Extra spending will … inform people about the
year-2000 census, and many marketers will … call attention to the quality and
prestige of their brands in the opening months of the new century."

Broadcast's audience erosion should be offset by
"soaring demand" as inventory is tightened by Campaign 2000 and the Summer
Olympics, he added.

"Local advertising may not boom next year," but
Coen estimated total local ad volume for 2000 at $93.85 billion, up 7.1 percent, without
breaking out cable separately. Total national ad spending, meanwhile, should rise 9.1
percent to $139.17 billion, he said.

For the first nine months of 1999, automotive spending
jumped by 16 percent on the "national TV networks," under which McCann lumped
together the TV and cable networks and syndication. Cable, in particular, benefited from
automakers' above-average spending hikes, he added.

Drugs/remedies, now TV's No. 2 category, boosted network-TV
spending by 13 percent, he said. However, packaged-goods companies' budgets have dipped,
in part because they're "hard-pressed to meet relatively high media-price
increases."

Among seven secondary categories, computers, insurance and
telecommunications hiked their TV-network spending by between 32 percent and 43 percent.

Zenith, meanwhile, projected roughly 7 percent growth in
North American ad spending in both 2000 and 1999, with the 2000 figure approaching $122
billion.

The United States accounts for the bulk of those estimates,
with Zenith putting the U.S. share of the worldwide advertising pie at roughly 42
percent-plus since 1998, although it could hit 44 percent in 2002.

Like McCann's, Zenith's forecast singled out factors
contributing to the U.S. spending growth -- bigger spending by "new-media
companies," Campaign 2000, the Olympics and a thriving economy. Cable is benefiting
from ratings gains, as well as from the benefits of computer-based media-buying tools
called optimizers, Zenith added.

The TV networks, despite audience erosion, continue to
thrive due largely to hefty dot-com and auto spending, Zenith chairman John Perriss said.

Zenith put Web spending at $3 billion for 2000, somewhat
below McCann's figure.

Responding to analysts' questions, Coen and Perriss said
Web-spending figures are not as "hard" as those for TV and other measured media.
Coen said he based his projections on Competitive Media Reporting data, which excludes
America Online Inc.'s spending because its $1 billion-plus tally for 1999 covers more than
advertising.

CMR's Web figures represent "all of the real
advertising dollars" AOL is getting, Coen added.

CBS Television Network executive vice president of planning
and research David Poltrack told the analysts that he expected no change from his forecast
of a year ago -- namely, that network TV would grow by "3 percent to 4 percent for
1999 and 14 percent for 2000," with the latter likely lifted by $500 million from
"the dot-com brigade" alone.

The broadcasters' ongoing audience slippage is "at a
much slower pace than in the recent past," he said, with the Big Four down "just
2 percent [so far] this season and up 1 percent in the November sweeps.

While Poltrack conceded that basic-cable networks are up 9
percent this season in the aggregate, he said the top 10 cable networks -- which collect
two-thirds of cable's total ad revenues -- "have not had any audience growth"
thus far, and they dipped 2 percent in November, in part due to ABC's Who Wants to Be a
Millionaire
.

Speculation about next year's upfront broke last week, too.
Turner Broadcasting System Inc. president Steven Heyer predicted that his company's cable
networks would see upfront revenue gains somewhere between 20 percent and 40 percent,
compared with 35 percent last year.

Turner executives indicated last summer that much of that
cable upfront's $1 billion jump (to $3.8 billion) was due to marketers' shifting budgets
away from broadcast networks.

Myers expected the TV networks' upfront growth to be
"toward the double-digits," adding that cable's "aggressive pricing
strategies" would further narrow the gap between TV and cable. But Poltrack said at
the conference that narrowing will mean "there is less incentive to move money out of
network TV."

Myers' projected percentage gains for TV and cable networks
in 2000 were similar to McCann's, although the companies' dollar figures differed.

On the local front, cable should grow by 25 percent next
year, far outpacing local broadcast's 4.5 percent, Myers said. But Myers also saw some
storm clouds on the local horizon, since "dramatic consolidation among local
retailers and car dealers will have sustained negative impact."

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