Revenue Growth Moderates in Q1

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Local cable advertising revenues among top MSOs grew by 3.5% in the 2006 first quarter, providing fresh evidence that a category once known for perennial double-digit revenue gains is maturing.

Six publicly held cable companies representing about two-thirds of the industry’s subscribers collectively generated $550 million in first-quarter revenues from advertising operations, vs. $531.3 million in the same period a year ago. (The six companies are Comcast Corp., Time Warner Inc., Charter Communications Inc., Cablevision Systems Corp., Insight Communications Co. and Mediacom Communications Corp.)

Among individual company results:

·Charter Communications Inc. led U.S. MSOs with a 9.4% increase in advertising revenue, to $70 million from $63 million a year ago.

·Comcast, the largest local cable advertising seller, registered a 4.4% increase, with first quarter revenues from advertising rising to $309 million from $296 million.

·Two MSOs reported a year-to-year decline in first quarter ad sales revenue .Time Warner said advertising revenue from its cable division dipped 1.7%, to $117 million. Cablevision Systems Corp.’s ad revenue fell to $23 million in the latest quarter from $24 million in the comparable ’05 period, a 4.2% decline. Neither company specified reasons for the decreases.

Other statistics:

·The $550 million in total ad revenue generated by the six public cable companies represented 4.9% of all cable-related revenue reported by the MSOs. Advertising’s share-of-revenue contribution has been falling steadily as MSOs grow faster in other areas such as high-speed Internet services and telephony.

·Average monthly ad revenue per video subscriber was $4.17 in the latest quarter, with ranges from $3.14 (Mediacom) to $4.79 (Comcast). The figure is derived by dividing total quarterly ad revenues by the number of video customers reported at the end of the quarter and allocating one-third of the amount to an average month.

The 3.5% revenue growth registered by top MSOs puts the local cable ad category behind the media industry average of 5.1% in advertising sales growth for the quarter, and well-behind the torrid growth pace registered by the online advertising category, according to estimates published by TNS Media Intelligence. According to TNS, U.S. Internet ad spending in the first quarter rose 19.4%, to $2.31 billion, and total U.S. ad spending increased 5.2% to $34.9 billion. National network cable ad spending increased 2.2%, to just under $3.6 billion, TNS estimated. (TNS doesn’t report spending estimates for the local cable TV ad category).

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