Local TV station revenue is expected to dip to $28.08 billion in 2017 from $28.42 billion in the Olympic and election year of 2016, but it is seen growing to $32.78 billion by 2020, according to a new forecast from BIA/Kelsey.
A big contributor to station revenue was retransmission consent payments, which totaled about $6.8 billion, according to BIA/Kelsey, which sees those fees continuing to grow over the next five years based on household growth rates and price increases.
“The dependence on retransmission fees has become incredibly important to local stations and many publicly traded ownership groups because it amounts to nearly one-third of their revenue,” said Mark Fratrik, senior VP and chief economist at BIA/Kelsey. “The fees provide a sound financial basis for the stations and have also become the foundation for many of the larger stations. Our analysis also uncovered that even mid-size and smaller market stations are increasingly relying on the income provided by these fees.”
Over-the-air advertising revenues rose by 11.4% in 2016, thanks in part to political spending. BIA/Kelsey predicts OTA ad revenue will decrease by 4.1% in 2017.
Digital revenue for the TV station industry grew 10.4% to $1.006 billion in 2016. BIA/Kelsey expected digital revenue to increase another 8.8% in 2017.
“Stations continue to embrace the digital innovations that bring them viewers and that effort is paying off in increased local ad revenues,” said Fratrik. “The local television markets are remaining healthy and will remain that way in the foreseeable future as long as they continue to improve their news, weather and programming options across all channels.”
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