It is, by all accounts, a very good time to be
running a station group. After years of being
stuck in neutral, automotive advertising is revving
along, up as much as 60% year over year. Core business—
from local mom-and-pops, retail, restaurants and the like—
is also cooking again. And the fall’s political season looks
to be so gargantuan that it will likely surpass the record
amounts spent by candidates in 2008’s presidential season.
The second half’s earnings numbers will shine
even brighter when compared to their dim
counterparts in 2009. “Automotive has undergone
a resurgence, and we see it continuing in
the third and fourth quarter,” says Meredith Local
Media President Paul Karpowicz, who forecasts
Meredith revenue to climb up in the high
teens to 20% over last year in the second half.
“Business has come back to life; life is good.”
Station groups have considerable momentum
as they zoom into the second half of the year.
Petry Television President/CEO Val Napolitano,
who handles agency business for around 120
stations, says stations’ national ad revenue is not
only robust but remarkably consistent across
several categories. “It’s not just automotive, but
fast food, retail, travel,” he says. “It’s almost all
categories.”
Local broadcasters say it’s just the type of
broad-based recovery that should sustain itself
through the rest of the year. “Auto advertising
continues to pace at a substantial double-digit
increase to the prior year, and the vast majority of the ad categories that we track continue to
pace ahead of the bookings from 2009,” says
Nexstar President/CEO Perry Sook. “The advertising
recovery shows no signs of abating at
this point.”
And while the networks’ May upfront presentations
are designed to woo media buyers,
count several broadcast
chiefs among those who
were impressed by the
Manhattan song and
dance. While they’ve
seen dozens of the presentations
before—and
are quick to note that
a great trailer does not
often translate to a great series—several said
it was the best batch of presentations they’d
seen in years, which bodes well for fall and
beyond.
“It was a terrific display of the networks’
commitment to over-the-air television,” believes
LIN Media President/CEO Vincent Sadusky.
“Stations need the network business to
be the driver of all other platforms.”
And then there is that whopper of a political
season set to kick off in around two months.
All indicators point to record amounts waiting
to be spent, thanks to several factors. Chief
among them are the landmark Citizens United
Supreme Court ruling on corporations’ election
spending, an extraordinary number of governor
seats up for grabs, and an intensely competitive
midterm election cage match between Democrats
and Republicans—as well as the upstart
Tea Party.
Evan Tracey, President of Kantar Media’s
Campaign Media Analysis Group, is forecasting
between $2.4 billion and $2.6 billion being
spent on candidates and issues in 2010—with
a giant chunk of that landing around Labor
Day and pouring in until early November. Not
one for hyperbole, Tracey
says all the key macro
factors are in place for
what will be nothing
short of grand-slam
spending. “It’s clearly
the most competitive
cycle I can remember,”
he says. “There’s almost
no such thing as a safe seat—every incumbent
is a marked man or woman. I’ve never seen
anything like it.”
Dark clouds loom
And so, the rest of 2010 is downright rosy for
local television, right? Not so fast. Business is still very difficult to forecast, say broadcast
chiefs, with ad buys coming in closer and closer
to airtime. Unemployment is dangerously high
in many parts of the country. And the Dow
Jones Industrial Average continues to bounce
like a yo-yo.
The acquisitions market remains lackluster.
Modest as they are, Local TV’s $16.5 million
purchase of WGNT
Norfolk and London
Broadcasting’s $31.3 million
grab of KIII Corpus
Christi represent the biggest
station deals of the
recent past. Some believe
that credit markets, hampered
by the persistent
economic uncertainty, are acting like it’s the fall
of 2008 all over again.
“I was feeling great until the last couple of
weeks,” says Gray Television President/COO
Robert Prather. “There’s a real black cloud over the
economy in Europe, and the credit markets here
have been affected—they’ve just shut down.”
Television Bureau of Advertising (TVB) President/
CEO Steve Lanzano says he’s “very bullish”
on the station business, but “coolly confi -
dent” in the overall economy, which he sees as
persistently vulnerable. “There’s sensitivity in
the marketplace where any event could turn
it upside down,” he says. “The economy is
based on confidence. If people are confi dent
that things are getting better, then things do
get better.”
Continuing to cloud confidence is that
creeping oil spill in the Gulf Coast, which
will dominate hearts and minds well into
the second half of the year. While the direct
economic impact involves only a handful of
states, when the rest of the country sees the
ubiquitous images of the greasy slick in the
media all day long, it chips away at their faith
in big business and government—and often,
their spending habits.
“Seeing BP on the corner of the screen on
CNBC 24 hours a day can’t help but make
people feel horrible,” Sadusky says. “Until
there’s greater evidence that they’re controlling
it, it will continue to make people pretty
depressed and weigh into their consumptive
attitudes.”
Economic storm clouds notwithstanding, all
agree that it’s a great time to be invested in local
TV. BIA/Kelsey forecasts $17 billion in station
ad revenue in 2010, a 7.5% increase over last
year, while SNL Kagan calls for an even more
sanguine $20.9 billion, which includes retransmission
consent revenue.
A panel of broadcast chiefs was unanimous
in their bullish outlook on the second half at
the SNL Kagan TV and Radio Finance Summit
in Manhattan June 16. An analyst told
the panel she’d heard that stations’ ad pacings
had started to flatten, prompting Fisher Communications’
Colleen Brown; Kepper, Tupper
& Co.’s John Tupper; and Titan Broadcast
Management’s Bert Ellis
to shake their heads in
unison. “I’ve not heard
that,” Brown said.
Beyond 2010
With 2010 looking mostly
airtight, broadcasters
are focused on their
game plans for what looks like a tricky 2011.
Next year won’t have the Olympics or the political
windfall, and while mobile television’s upside
is tremendous, it may be a few years before users
getting local video on their smartphones yields
real revenue. “There are still some business processes
and monetization issues to be worked out
for mobile,” Lanzano says. “It’s still in its genesis
right now.”
Some are concerned that the type of hangover
revelers associate with New Year’s Day awaits the
station world at the dawn of 2011. “Q3 and Q4
[2010] look to be spectacular on a year-to-year
basis; 2010 is, however, giving broadcasters but
a brief respite from the new reality,” says Frank
N. Magid President of Television Steve Ridge.
“Reversing the overall downward trend remains
a longer-term challenge.”
The key, say broadcast execs, is better serving
viewers and marketers on all platforms,
not letting costs get out of whack amidst
2010’s fat margins, and growing the new
business that saved local TV’s bacon back
when the automotive ads dried up—and
hopefully will do so again when the political
taps run dry.
“[Stations] can’t go back to the spending levels
they had before just because we got a bump
in business this year,” says CBS Television Stations
President Peter Dunn. “We need to prepare
for beyond 2010.”
