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1
Stations in a Difficult Time
Tom WolzienSenior Media
Analyst(212) 756-4636
Television Bureau of AdvertisingMarch 26, 2002
Sanford C. Bernstein & Co., LLC A subsidiary of Alliance Capital Management, L.P.
1345 Avenue of the Americas New York, NY 10105
Copyright 2002This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of, or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited or any of their subsidiaries or affiliates to any registration or licensing requirement within such jurisdiction. This report is based upon public sources we believe to be reliable, but no representation is made by us that the report is accurate or complete. We do not undertake to advise you of any change in the reported information or in the opinions herein. This research was prepared and issued by Sanford C. Bernstein & Co., LLC and/or Sanford C. Bernstein Limited for distribution to market counterparties or intermediate or professional customers. This
report is not an offer to buy or sell any security, and it does not constitute investment, legal or tax advice. The investments referred to herein may not be suitable for you. Investors must make their own investment decisions in consultation with their professional advisors in light of their specific circumstances. The value of investments may fluctuate, and investments that are denominated in foreign currencies may fluctuate in value as a result of exposure to exchange rate movements. Information about past performance of an investment is not necessarily a guide to, indicator of, or assurance
of, future performance. Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited, or one or more of its or their officers, directors, members, affiliates or employees, or accounts over which they have discretion, may at any time hold, increase or decrease positions in securities of any company mentioned herein. Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited, or its or their affiliates may provide investment management or other services for such companies or employees of such companies or their pension or profit sharing plans, and may give advice to others as to investments in such companies. These entities may effect transactions that are similar to or different from those mentioned herein. To our readers in the United States: Sanford C. Bernstein & Co., LLC is distributing this report in the United States and accepts responsibility for its contents. Any U.S. person receiving this report and wishing to effect securities transactions in any security discussed herein should do so only through Sanford C. Bernstein & Co., LLC. To our readers in the United Kingdom: This report has been issued or approved for issue in the United Kingdom by Sanford C. Bernstein Limited, regulated
by the Financial Services Authority and located at Devonshire House, 1 Mayfair Place, London W1J 8SB, +44 (0)20-7170-5000. To our readers in member states of the EEA: This report is being distributed in the EEA by Sanford C. Bernstein Limited, which is regulated in the United Kingdom by the Financial Services Authority and holds a passport under the Investment Services Directive. Tom Wolzien, Bernstein's Senior Media Analyst, holds an interest in a public company, ACTV, Inc., and director of a subsidiary to exploit his patents linking mass media with on-line services. ACTV may be
involved in business dealings or legal actions with companies covered by Wolzien. Currently ACTV has business arrangements with AOL Time Warner, Viacom, and Liberty Media and is involved in legal action against Disney.
2
Economic Revisions
MediaMediaBernstein Bernstein ResearchResearch
Blue Chip Quarterly Consensus Nominal GDP Forecasts
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03
Jan '01
Nov '00
Sept '00
Sept '01
Oct '01
June '01
Mar'02
Source: Blue Chip Financial Forecasts
3
30 Year Advertising Trend
MediaMediaBernstein Bernstein ResearchResearch
30 Year Advertising History & Trend 1970-2000Estimates '01-04
R2 = 0.9656 Standard Error = 11,813
0
50,000
100,000
150,000
200,000
250,000
300,000
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Ad
Sale
s ($
mill
ions
)
Ad Spending 95% Confidence Interval 99% Confidence Interval
Series6 Linear (Ad Spending)
Source: Unhiversal McCann data and Bernstein estimates
4
Advertising and GDP
MediaMediaBernstein Bernstein ResearchResearch
Source: Universal McCann deata and Bernstein estimates
GDP and Advertising Growth
-6.0%
-3.0%
0.0%
3.0%
6.0%
9.0%
12.0%
15.0%
18.0%
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
Ye
ar
ov
er
Ye
ar
Pe
rce
nta
ge
Gro
wth
GDP NOMINAL GROWTH RATE (Real *Deflator))
ADVERTISING GROWTH RATE
5
Advertising: Remembering Past Wars
MediaMediaBernstein Bernstein ResearchResearch
1940 1941 1942 1943 1944 1945 1946Total National 1,190 1,280 1,220 1,455 1,655 1,740 1,950Total Local 920 970 940 1,035 1,045 1,100 1,390Grand Total 2,110 2,250 2,160 2,490 2,700 2,840 3,340Growth 5.0% 6.6% -4.0% 15.3% 8.4% 5.2% 17.6%
World War II
Source: Universal McCann Data
6
Advertising: Remembering Past Wars
MediaMediaBernstein Bernstein ResearchResearch
Gulf War
1990 1991 1992 1993 1994 1995NOMINAL GDP (in millions) 5.7% 3.2% 5.6% 5.1% 6.2% 4.9%ADVERTISING AS PCT OF GDP 2.23% 2.13% 2.10% 2.10% 2.15% 2.20%Total US Advertising 4% -2% 4% 5% 9% 7%
Total Television 8% -3% 8% 4% 12% 7%
Total Radio 5% -3% 2% 9% 10% 10%New spapers Total 0% -6% 1% 2% 10% 6%Magazines Total 1% -4% 7% 6% 10% 5%Total Yellow Pages 7% 3% 2% 2% 3% 4%Direct Mail & Delivery 6% 5% 4% 8% 7% 12%
Source: Universal McCann Data
7
Advertising: Remembering Past Wars
MediaMediaBernstein Bernstein ResearchResearch
Gulf War
1990 1991 1992 1993 1994 1995GDP NOMINAL GROWTH 6% 3% 6% 5% 6% 5%
TV Total Growth 8% -3% 8% 4% 12% 7%Four Netw ork Grow th 5% -3% 8% 0% 7% 6%Cable Netw ork Grow th Rate 55% 9% 10% 16% 18% 16%
National Spot TV Growth Rt 6% -9% 6% 3% 15% 1%Local Spot Growth Rate 3% -4% 7% 4% 12% 6%Local Cable Grow th 20% 18% 38% 12% 14% 26%
Source: Universal McCann Data
8
Advertising: Looking Forward
2000 2001 2002 2003 2004NOMINAL GDP (in millions) 6.5% 3.4% 3.3% 5.5% 5.7%ADVERTISING AS PCT OF GDP 2.39% 2.18% 2.13% 2.13% 2.13%Total US Advertising 10% -6% 1% 6% 6%
Total Television 7% -6% 1% 5% 5%
Total Radio 12% -8% 0% 7% 7%New spapers Total 6% -6% -2% 4% 6%Magazines Total 8% -10% -4% 2% 3%Total Yellow Pages 6% 2% 2% 4% 4%Direct Mail & Delivery 8% 3% 3% -1% 1%Total Online Advertising 85% -25% -3% 3% 12%
Source: Universal McCann Data and Bernstein Estimates
9
Advertising: Looking Forward
2000 2001 2002 2003 2004GDP NOMINAL GROWTH RATE (Real * Deflator))5.8% 3.4% 3.3% 5.5% 5.7%
TV Total Growth 14% -8% 1% 5% 5%
Four Netw ork Grow th 12% -6% 3% 6% 8%Cable Netw ork Grow th Rate 20% -8% -2% 2% -1%
National Spot TV Growth Rt 13% -19% 1% 3% 4%Local Spot Growth Rate 14% -4% -1% 6% 2%Local Cable Grow th 19% 3% 6% 16% 30%
Source: Universal McCann Data and Bernstein Estimates
10
Automotive Advertising:Purchase Drivers Are Changing
U.S. Light Vehicle SalesDrivers of Purchasing Decision Time Series
Brand vs Deal
0%
10%
20%
30%
40%
50%
60%
70%
June'90
June'91
June'92
June'93
June'94
June'95
June'96
June'97
June'98
June'99
June'00
June'01
% o
f Res
pond
ents
List
ing
as T
op T
hree
Co
nsid
erat
ion
Brand Reputation IncentivesSource: CNW and Bernstein Analysis
Bernstein Bernstein ResearchResearch MediaMedia
A change from brand to the dealU.S. Light Vehicle Sales
Drivers of Purchasing DecisionsChange June '01vs June '90
-30% -20% -10% 0% 10% 20% 30%
Percentage Change in Importance June '01 vs June '90
Brand ReputationSizeSticker Price
QualityValueUnique ProductPerformance Image
Rebel ImageNostalic ImageStatusOutdoor ImageYouth ImageUtilityMonthly PaymentStylingSafetyIncentives
Source: CNW and Bernstein Analysis
11
Capitalization of Media Companies
MediaMediaBernstein Bernstein ResearchResearch
91.3
48.9
42.4
34.6 34.1 32.4 30.6
24.8 23.020.3
13.810.8
7.2 6.4 5.8 5.7 4.6 2.5 2.2 1.1 0.8
111.6
$0
$25
$50
$75
$100
$125
AOL Tim
e Warn
er
Viaco
m (i
ncl. I
NF)
Disney
Vivendi
News C
orp.
Liberty
Media
Clear C
hannel
Comca
stUSA
Cox Com
m.
Gannet
Tribune
Yahoo
New Y
ork T
imes
EW S
crip
ps
Wash
ingto
n Post
Knight R
idder
Dow J
onesBelo
Hearst-A
rgyl
e
Sincl
air Bro
adcasti
ng
Primedia
US
$ (b
illi
on
s)
Bernstein & Bloomberg Estimates as of March 20,2002
12
Stations in a Difficult Time
Tom WolzienSenior Media
Analyst(212) 756-4636
Television Bureau of AdvertisingMarch 26, 2002
Sanford C. Bernstein & Co., LLC A subsidiary of Alliance Capital Management, L.P.
1345 Avenue of the Americas New York, NY 10105
Copyright 2002This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of, or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited or any of their subsidiaries or affiliates to any registration or licensing requirement within such jurisdiction. This report is based upon public sources we believe to be reliable, but no representation is made by us that the report is accurate or complete. We do not undertake to advise you of any change in the reported information or in the opinions herein. This research was prepared and issued by Sanford C. Bernstein & Co., LLC and/or Sanford C. Bernstein Limited for distribution to market counterparties or intermediate or professional customers. This
report is not an offer to buy or sell any security, and it does not constitute investment, legal or tax advice. The investments referred to herein may not be suitable for you. Investors must make their own investment decisions in consultation with their professional advisors in light of their specific circumstances. The value of investments may fluctuate, and investments that are denominated in foreign currencies may fluctuate in value as a result of exposure to exchange rate movements. Information about past performance of an investment is not necessarily a guide to, indicator of, or assurance
of, future performance. Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited, or one or more of its or their officers, directors, members, affiliates or employees, or accounts over which they have discretion, may at any time hold, increase or decrease positions in securities of any company mentioned herein. Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited, or its or their affiliates may provide investment management or other services for such companies or employees of such companies or their pension or profit sharing plans, and may give advice to others as to investments in such companies. These entities may effect transactions that are similar to or different from those mentioned herein. To our readers in the United States: Sanford C. Bernstein & Co., LLC is distributing this report in the United States and accepts responsibility for its contents. Any U.S. person receiving this report and wishing to effect securities transactions in any security discussed herein should do so only through Sanford C. Bernstein & Co., LLC. To our readers in the United Kingdom: This report has been issued or approved for issue in the United Kingdom by Sanford C. Bernstein Limited, regulated
by the Financial Services Authority and located at Devonshire House, 1 Mayfair Place, London W1J 8SB, +44 (0)20-7170-5000. To our readers in member states of the EEA: This report is being distributed in the EEA by Sanford C. Bernstein Limited, which is regulated in the United Kingdom by the Financial Services Authority and holds a passport under the Investment Services Directive. Tom Wolzien, Bernstein's Senior Media Analyst, holds an interest in a public company, ACTV, Inc., and director of a subsidiary to exploit his patents linking mass media with on-line services. ACTV may be
involved in business dealings or legal actions with companies covered by Wolzien. Currently ACTV has business arrangements with AOL Time Warner, Viacom, and Liberty Media and is involved in legal action against Disney.
