If the Television Bureau of Advertising's initial 2009 forecast was bad, the revised one issued nine weeks later can only be described as superbad.
As the prospects for a modestly soft year for broadcasting grew dimmer and dimmer, the trade association—which represents some 600 stations—took the dramatic step of recalculating its outlook last week. The only other time it has done so was in 2001, as that forecast was released just before the Sept. 11 attacks.
“It's an overwhelming reality check in response to the softness in the marketplace,” says TVB President Chris Rohrs. “We spoke to our board and key members and they said they'd appreciate a redo.” The revised numbers suggest a total spot revenue decline of 7%-11%, with local slipping 4%-8% and national down 11.5%-15.5%.
September's report originally called for a total spot decline of 2%-5% in 2009, with local spot between 2% and minus-1% and a national drop-off of 7%-10%.
(TVB also reforecast the rest of 2008, suggesting a 7% decline instead of the original flat prediction.)
How bad is it out there? On Nov. 7, Gray Television was threatened with de-listing by the New York Stock Exchange when its stock slipped under a buck, way down from its 52-week high of $9.55.
Broadcast stocks are getting hammered all over the Exchange. Belo was trading at $1.65 late last week, down from over $10 a share six months ago. Nexstar traded at $0.90 late last week, down from $6.50 six months ago. For many, neither the election season nor the Olympics pulled in anticipated revenue.
Bombarded daily by news stories about the perils of personal fiscal irresponsibility, people just aren't spending much money. Rohrs cites a “consumer lockdown” crippling the country, drastically affecting the retail, entertainment and, as any station manager is painfully aware, automotive segments. Whereas auto advertising represented perhaps a quarter of a station's revenue in the recent past, broadcasting executives say it's in the single digits these days. “We let automotive become such a huge category,” says Meredith Broadcasting President Paul Karpowicz of the industry in general. “We weren't aggressive in developing new categories, and now we're in the unenviable position of having to develop new streams of revenue.”
An increasingly popular parlor game involves predicting when broadcasting starts to see sunshine. Many are hoping that the optimism President-elect Obama seems to stir up will chip away at consumers' spending freeze, as will falling gas prices. Television soothsayers are suggesting better times toward the end of 2009 and beginning of 2010, but all agree the industry is in uncharted territory.
“The problems are so long in the making and so deep that I don't think anybody expects a quick turnaround,” Rohrs says.
WEB REVENUE GAINS EXPECTED
Yet it's not all doom and gloom. It's axiomatic that TV viewership increases in bad economic times. On the Web, TVB calls for a 25%-35% gain in revenue next year, and broadcasters are scoring big wins over pay television operators in terms of retransmission consent. LIN TV lauded its “fair market agreement” in a recent clash with Time Warner Cable, and Nexstar bagged $6.2 million in retrans cash in the third quarter—a 38% gain from the same quarter last year. With many auto dealers going belly-up, some stations report seeing the remaining ones substantially boosting their media presence to let shoppers know they're still in business.
Faced with a steep slip in national advertising, stations are putting more resources into what they do best: connecting local viewers with local programming and local vendors.
“We have to get back to the fundamentals of what makes television a good business,” Karpowicz says. “There's always opportunity in times like this.”
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