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TV-Station Web Sites Gain on Newspapers

Newspapers may have the oldest and biggest local Web sites based on revenue, but competing Web sites of TV broadcasters are growing faster, according to a joint BIA Financial Network and Borrell Associates report released early Wednesday.

Since 2002, overall local Web advertising grew at a 40.5% compound annual growth rate, with newspapers lagging behind with a 33.5% CAGR and TV surging with a 67.2% CAGR. TV stations are gaining ground fast because they tap into fast-growing video and search advertising, while newspaper Web sites are heavily dependent on slower-growing display ads.

TV Web sites are valued at $500,000-$9 million and radio Web sites are valued at $250,000-nearly $6 million, according to the report, “What’s a Website Worth? Analysis of Media Website Values.” Focused on local Web advertising, the report analyzes revenue, expenses and growth rates to calculate valuations.

Newspaper Web sites are valued at $500,000-$30 million, depending on market size and development of the Web site itself. They top broadcasters because newspaper Web sites are typically older.

“Given their growth potential, the value multiples of media Web sites may be 2-4 times that of the core business,” BIA vice president Mark Fratrik said in a statement.

The report put total revenue of local newspaper Web sites at $3.7 billion in 2008 versus $1.2 billion for local TV stations and $255 million for local radio. TV and radio Web sites have twice the growth rate though.

Traditional media owners have an advantage over Web rivals because they can use their analog flagship platforms to promote digital properties and can repurpose content, which lowers costs. “As a result, [media Web sites’] cash-flow margins are robust -- in most cases much higher than their parents,” Borrell CEO Gordon Borrell said in a statement.

Web sites currently generate around 3% of gross revenue at radio and TV companies, and this is projected to grow to 5%-6% by 2011. Showing that newspapers are more advanced, their Web sites generate 6.5% of revenue and that is forecast to grow to 10% by 2011.