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Ad prospects 'better than they've ever been'

The ad recession that cut more than $11 billion from media company coffers last year, and led some to cut quality or raise consumer prices, appears to be over. At least for now.

At Viacom - the most ad-dependant media company with CBS, MTV, radio and billboards - prospects "are better than they've ever been," President Mel Karmazin said Thursday. That echoed AOL Time Warner's prediction on Wednesday that sales at its TV networks and magazines will pick up going into 2003.

The recent upbeat news led Merrill Lynch's Jessica Reif Cohen this week to boost her earnings forecasts for Fox and Disney.

"We know the ad market is recovering," she says. "We didn't want to wait" for company reports.

TV and radio have led the upturn, but other media may join.

"In magazines, you're beginning to see it," says UBS Warburg's Christopher Dixon. "Newspapers are either first or last in the cycle."

TV executives say the strength goes beyond current political ads or easy comparisons with the 2001 falloff after the Sept. 11 attacks.

Spending "is coming across all categories," says JoAnn Ross, CBS' new president of network ad sales. "They all want to be in the fray."

Companies are spending heavily now for new products such as Vanilla Coke, Orange Windex and Crest Whitestrips. And Hollywood is pushing DVDs as well as films.

"Entertainment accounts for 18% of TV network advertising, and four years ago, it was 12%," says Dixon. "It's the No. 1 category."

But some industry watchers warn the mood could change fast.

"Ad agencies haven't seen changes in their clients' budgets, so to them the increase is short term," says Joe Mandese of Media Markets Daily.

Global ad giant WPP Group underscored that point Thursday. CEO Martin Sorrell said he doesn't expect a broad pickup until 2004.

And all bets are off if there's a long war in Iraq, more terrorism or a drop in consumer spending.

"The ad slump is definitely over," Blaylock & Partners analyst John Tinker says. "The question is whether we'll slip back into it."


David Lieberman, . USA TODAY. October 24, 2002

Copyright © 2002 USA TODAY. All rights reserved.