Spending on media rises

Growth forecast to reach $828 bil by 2007

NEW YORK — Recession evidently was a tonic for the entertainment industry in 2002, as total U.S. consumption of movies, pay TV, games and videos grew to $67.2 billion in 2002, according to a new report out today by New York-based boutique investment bank Veronis Suhler Stevenson.

Its Communications Industry Forecast claims that overall spending on media grew a modest 3.3% in 2002 but is gaining momentum in ’03, with growth forecast at 5.5% over the next several years to reach $828 billion by 2007. Filmed entertainment expenditures, which include box office, video/DVD and TV, are among the fastest growing in the communications sector at 8.5%.

Spurred by continued gains in DVD, total spending by consumers and institutions is projected to surpass $100 billion by 2007, according to Veronis Suhler.

DVDs show heft

There are now some 26.4 million households with DVD players in the U.S., which helped generate total video and DVD software spending of $24.4 billion last year.

Recorded music was the only laggard, posting a spending decline last year of 8.2% to $12.6 billion.

Veronis Suhler analysts aren’t particularly bullish about an imminent recovery either, predicting it will continue to lose 3.9% over the next five years. Theatrical, which enjoyed a record year in ’02 — thanks to ticket price hikes and 22 blockbusters that racked up $4 billion at the box office domestically — fueled total spending of $9.8 billion off some 1.64 billion admissions.

And all those blockbusters helped boost cinema advertising by 22.4% to $301 million.

TV tops

TV viewing, not surprisingly, occupies the prime position among media, with the average U.S. viewer watching 1,701 hours annually. By contrast, Internet usage in 2002 average around 154 hours per person annually.

One of the fastest growing segments, cable and satellite TV spending, was up 10.2% in 2002 to $77 billion; the sector has outpaced the national economy since 1997.

Ad spending enjoyed the biggest recovery over 2001, with broadcast TV up 8.2% over the year to just under $40 billion, boosted by record political campaign spending and the 2002 Winter Olympics.