Associated Press
Media Honchos Face Weaker Ad Climate
07.07.2005, 04:32 PM

Just days before they gathered for an annual retreat in this Idaho resort, media CEOs got some bad news about advertising when a key forecaster trimmed estimates for ad spending for the rest of 2005.

Nonetheless, executives here remained upbeat on the prospects for this year, even without the added boosts from the Olympics and elections in 2004.

Last week Bob Coen, a leading forecaster of ad trends with the Universal McCann agency, trimmed his estimates for full-year ad growth to 5.7 percent this year, down from his previous estimate of 6.4 percent, because of weaker demand.

Merrill Lynch analyst Lauren Rich Fine was even less optimistic in a recent note to investors, saying she expected growth of just 4.7 percent this year, calling the U.S. advertising environment "relatively tepid."

In another negative sign, major television networks suffered a second straight annual decline in their just-concluded "upfront" ad selling period, in which the vast majority of prime time ads for the coming fall TV season are sold in advance.

However, some of those ad dollars are shifting into cable and other forms of more targeted media, benefiting the owners of those kinds of outlets.

Debi Lee, who became chief executive officer last month of BET Holdings, a cable channel unit of Viacom Inc., said Thursday that cable was continuing to see money shift toward it.

"When the market does get softer, we find that people want to target more," Lee said, as she headed into the conference with BET chairman Robert Johnson. But "the advertising market is still there," she added.

John Hendricks, founder and chairman of Discovery Communications Inc., which owns the Discovery, TLC and Animal Planet channels, said he was "pretty bullish" on the market for advertising following the upfront season, which is known in the industry as "scatter."

"With the pace the economy is going, companies will have new products to bring out" that will need advertising to promote them, Hendricks said.

Media analysts also say that the weakness in network advertising is part of a broader trend of marketers wanting to more closely pinpoint their audiences with targeted media such as cable and the Internet.

"The areas of highest growth is where there's targeted advertising, and that's growing faster than the broad-based advertising," said Jim Rutherfurd, executive vice president at Veronis Suhler Stevenson, a media private equity firm.

Also at the conference, executives from Google Inc. demonstrated a new program called Google Earth, which provides images from all around the globe collected from satellites.

John Malone, the chairman of Liberty Media Corp., said the Google executives also discussed their plans for offering ways to search video files.

"I think they've come up the curve to learn it's all about rights," Malone said. "They were basically saying, here's our vision of video and video search, but we're only going to be able to do it to the degree we can make partnership deals with the underlying rights holders."

A number of discussions at Sun Valley were overshadowed by the terrorist attacks in London earlier in the day. Time Warner Inc. Chief Executive Dick Parsons told reporters he spent an hour on the phone ensuring that all of Time Warner's London-based personnel were unhurt.

The conference organizers also hastily added a panel discussion on terrorism following the attacks, asking guests George Tenet, the former CIA director, New York Times columnist Thomas Friedman and former NBC anchor Tom Brokaw to discuss their views with the attendees. Like the other official proceedings and events at the conference, the panel discussion was closed to reporters.