TV revenue contraction to continue until fall
Apr 3, 2009 8:47 AM
It’s no secret that the broadcast industry is suffering financially right along with the rest of the country, but tactical and strategic decisions industry leaders make today could position them to survive the economic doldrums and emerge with more efficient operations when the economy rebounds.
Broadcasters suffered deep declines in revenue as the recession worsened in 2008, and that trend is expected to continue until the fall of this year when they are expected to make up some of the lost revenue, according to the latest SNL Kagan report on the economic health of radio and TV stations.
The report, "Radio/TV Station Annual Outlook: Market-by-Market Revenue Projections," found that local and national spot TV ad revenue declined 6.9 percent to $20.1 billion in 2008. That decline is expected to continue this year with anticipated revenue declines from TV ads dropping 15.7 percent.
According to the report, broadcast markets in Michigan are expected to see the slowest revenue growth in the country as the car industry responds to its tenuous future with anticipated mass layoffs, the report said. Detroit is expected to be hit the hardest with a 17.7 percent decline in revenue this year and a five-year compound annual growth rate of -4.4 percent.
Broadcasters in the Washington, D.C., market are expected to fare the best with a five-year compound annual growth rate for TV revenue of -0.2 percent, the report said. SNL Kagan attributed the relative health of the market to massive increases in federal spending and migration of laid-off banking workers back to the public sector. San Diego ran a close second in the SNL Kagan report with an anticipated compound annual growth rate of -0.5 percent.
Overall, SNL Kagan projects revenue declines will turnaround next year and forecasts these modest gains to continue through 2013, offsetting some of the current declines. However, TV revenue is expected to drop 2 percent overall for the five-year period.
According to SNL Kagan senior analyst Robin Flynn, there are two keys to success going forward: reducing expenses and continuing to transition business models to “develop digital assets and non-traditional revenue streams.”
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