CREDIT SUISSE MEDIA WEEK FEEDBACK . DAY ONE

"Broadcast and cable companies presenting at Media Week today (Scripps, CBS, NBC & Viacom) all commented on the strong advertising market in Q4 with scatter priced at a premium to upfront. Scripps suggested 15% growth in scatter while CBS commented that ‘scatter is terrific'. Political advertising has been a strong contributor to growth, with spend for the congressional elections ahead of the presidential election in 2004. CBS was optimistic about how the political spend would affect next year's upfront. Categories supporting the current scatter market are retail, electronics and telcos. Entertainment stocks were strong on the back of these comments NWSA +2.69%, CBS +1.51%, VIAB +1.23%, TWX 1.19% and DIS +1.06%

Two media forecasters provided their views on the outlook for 2007 advertising growth with a relatively wide disparity in their estimates for the US. McCann Universal forecasts for 2007 are for +4.8% growth with continued significant variation between local (+2.7%) and national (+5.9%) growth. By comparison 2006 is expected to have finished with overall growth of +5.2%,, with local +2.2% and national +6.9%. The key drivers by medium for the 2007 forecasts are 1) Internet forecast to grow +15% after +20% in 2006; and 2) cable networks . forecast to grow +6.5% in 2007 after +4.5% in 2006. Weakest growth is expected to come from 1) spot TV . flat after +11% growth in 2006 (difficult political comps); and 2) newspapers . forecast +1% after -3% in 2006."

Group M outlook is bullish on the prospects for advertising growth

"Group M was most bullish re emerging markets with North Asia and Eastern Europe providing the most promising prospects with double digit growth forecast. The outlook for the UK was the most bearish. By medium, internet is expected to be the dominant driver of growth in the West with Internet advertising as a percentage of total advertising at 14% in the UK and 12% in the US. In the East, it is television that is the key driver of growth. Forecasts for US advertising are for growth of 2.4% with the greatest contribution to growth coming from cable and the Internet. Cable is believed to be becoming more effective in segmenting the audience, benefiting its share of the ad pie. Group M attributed the growing Internet share to its accountability, growing broadband penetration leading to greater demand for entertainment, and growth in e-commerce. (Jolanta Masojada)"

Publicis Chief Tries to Squelch Takeover Rumors (WSJ)

"Publicis Groupe SA Chairman and Chief Executive Maurice Levy denied widespread rumors circulating on Madison Avenue that Publicis was considering a bid for Interpublic Group of Cos., the New York holding company that is trying to turn itself around after an accounting scandal and major client defections. "We have no negotiation under way" with Interpublic and "no conversations have taken place," said Mr. Levy. He also said he has no intentions of asking his board for permission to pursue an acquisition of Interpublic at supervisory board meeting, which is scheduled for next week. "We have nothing cooking," on Interpublic, he added. Publicis, the French ad holding company that owns firms such as Leo Burnett, Saatchi & Saatchi and Starcom MediaVest, is the world's fourth largest global marketing company by revenue, behind Omnicom Group, WPP Group and Interpublic Group. People close to the company say that over the past few months several investment bankers have talked to Publicis about the pros and cons and financing of a possible merger with Interpublic. Publicis has also done some internal work that looked at a possible merger with Interpublic, according to a person close to the company. Mr. Levy denies having ordered up such an analysis. "I have not ordered any of our teams to look at conflicts or the combination of the two companies in preparation for a possible takeover or a merger," he added Last month, Mr. Levy told the Wall Street Journal the company would consider making a large strategic acquisition. "We are contemplating several possible strategies in terms of acquisitions," Mr. Levy said at the time.

Credit Suisse Comment: M. Levy mentioned earlier this year that he was looking at acquisition targets for his group, as PUB is under pressure to 1) confirm its 2005 new business performance and its H1 2006 organic growth and 2) re-leverage its balance sheet, which should show a net cash positive position at end 2007, on our estimates. We have highlighted over the past months our view that PUB might have to 1) choose to sacrifice its 2008 margin target to accelerate its growth profile or 2) make an acquisition that could help it to get closer to WPP and OMC or to gain more weight in some areas, such as SAMs. As acquisition risks grow, these latest press speculations will not help PUB in the short term, in our view. (Nick Bertolotti)"

BT opts for aggressive film pricing (FT)

"BT Vision, the broadband television service launched today by BT, the telecommunications group, will aggressively price on-demand pay-per-view films to take on rivals including British Sky Broadcasting and NTL, as well as high street video chains such as Blockbuster. Consumers currently pay about £3.50 to £4.25 to rent or download a new release film. BT is expected to announce that its price for new releases will be £3 a film or less on BT Vision. Users of the service will have roughly 40 free-to-air channels available on Freeview, the digital terrestrial service, an 80-hour digital video recorder and on-demand programming including films, television shows and music videos. BT has been signing content deals with US studios, including Disney, Dreamworks and Paramount. It is poised to sign a deal with Warner Brothers, which will give it access to the Harry Potter franchise. It has secured music video deals with MTV and Sony BMG and is expected to announce an agreement with EMI. The company said "tens of thousands" had pre-registered for BT Vision. However, with more than 70 per cent of UK households already having access to digital television, some analysts question how much demand there will be for the service. The new service will be available to BT's broadband customers and its launch comes as the company seeks to retain customers and attract new subscribers when the likes of BSkyB, Carphone Warehouse and Vodafone have started to offer "free" broadband. BT also needs to find new sources of revenue at a time when less people are using fixed-line telephones to make their calls. James Murdoch, BSkyB's chief executive, has identified the incumbent broadband providers as most vulnerable to new competition. He attacked BT Vision in September, saying: "If BT wants to just give away the most important services out there, that ends in a very scary place for them."

Credit Suisse Comment: The gloves are off in the battle for broadband... BT have just announced the launch of BT vision, where they are to give away free set top boxes (worth gbp199) bundled with their DSL package, the service requires no subscription & the co have announced a partnership with Setanta where they will end up showing 75% of premiership games... The battle for broadband is now hotting up nicely. See our previous notes on our thoughts on the battle for broadband: UK broadband - too many pipes published 31st Oct, or the recent "UK broadband nightmare" published 23rd Nov by our Telco team, as well as our earlier notes on .Triple Play, Triple Competition., which all point out to pressure for BSY in the medium term. (Nick Bertolotti)"