Continued drops in television revenues this year have prompted BIA Advisory Services to revise its earlier projected estimates for 2009 to $16.6 billion, a 17.3% percent decline from 2008 and a return to levels the industry has not seen since 1995.
BIA also predicts that TV revenues will remain flat through 2011, and will rise to only $17.5 billion by 2013, fueled by an expected increase in online revenues from internet broadcasting, and potential regulatory efforts by the FCC to prop up local broadcasting.
TV Hurt by Recession
BIA attributes the persistent drop in revenues to the bad economy and to the current state of flux and transition in the TV industry. The year’s second edition of the firm’s quarterly “Investing In Television Market Report” also reveals a slowdown of transactions within the TV industry to $453 million – or 45 stations sold – for the first half of the year, only a slight increase over the same time last year, and an indication that buyers and sellers are waiting for the economy to improve.
TV Follows Radio Down
The downward forecast for TV revenues comes after BIA’s? similarly dismal revision last month in the forecast for 2009 radio revenues. BIA estimated that radio revenues will fall 15% in 2009, to $14 billion. The original forecast was for only a 10.6% decline.
Radio industry transactions through May of 2009 totaled just $112 million, down from a significantly higher $389 million in 2008, even though the number of radio stations sold has only decreased from 307 through May of 2008 to 302 through May of 2009.
“Transactions have slowed to an anemic pace and reflect the general lack of financing currently available for stations and broadcast groups and the poor industry attitude,” said Mark R. Fratrik, VP, BIA Advisory Services. “We believe that companies are waiting on the sidelines for an improved economy and for the right opportunities to make strategic acquisitions.”
Online Revenue Will Help
BIA continued to emphasize that local TV stations will see a return to profitability the quicker they see themselves as local information and entertainment companies rather than simply television transmitters because they have “extraordinary” opportunities to push local content through digital platforms. They also have the ability to use their local sales staff to cross-promote events and programs for advertisers that need to reach the community.
“We are very optimistic about the online revenue potentials for TV broadcasters, particularly as they step-up their mobile and internet offerings,” said Michael Boland, mobile local media analyst for BIA’s The Kelsey Group.
BIA projects that the industry will see online revenues of $556 million in 2009, moving up to $1.1 billion by 2013, representing a 19.7% compounded annual growth rate for online TV broadcasting advertising.
Broadcast Industry in FCC’s Hands
BIA suggested that the future strength of the broadcast industry as a whole may lie in the hands of the new leadership of the Federal Communications Commission (FCC), which it believes should revisit the cross-ownership and local ownership rules.
“With local media companies dying on the vine and the television industry, in particular, hamstrung in many large and small markets, it seems like a good time to explore the steps to save local media outlets, including the elimination of media cross-ownership and local ownership rules,” said Tom Buono, CEO of BIA. “As this media ecosystem has changed and the advertising marketplace contracted, immediate government intervention to allow media companies to survive and prosper is clearly in the public’s best interest.”
About the report: BIA’s Investing in Television report provides listings of all digital TV stations as well as lower-power and Class A stations that are operating on analogue signals. The firm also continues to monitor the 381 stations that have secondary multicast program signals, in addition to the 1,600 plus full power stations.