Political Season Can't Save Local-TV Sales

Local television stations across the country are suffering a decline in advertising revenue in the tough economy, despite a blockbuster political season. Buffeted by the faltering real-estate market and shrinking auto sales, total ad revenue for local stations nationwide fell 2.3% in the first quarter compared with the year-earlier period, according to the Television Bureau of Advertising, a trade group for local stations. And the second quarter is on pace for a 3% to 5% decline, according to Chris Rohrs, the group's president. While TV networks' ad-revenue growth has stagnated amid a flurry of technological changes and newspapers have watched advertisers flee to the Internet, local TV stations have until recently been a relatively stable feature of the tumultuous media landscape. But now nonpolitical advertising at local stations is down in the mid-to-high single digits, by some estimates. And that poses a problem for a host of media companies that had grown accustomed to their stations' steady, if not always growing, profits. The downturn could accelerate stations' chase for new revenue streams, such as online classifieds and streaming video, predicts Gordon Borrell, chief executive of media-research firm Borrell Associates. He also says it could speed a shakeout in the business: "We don't think local markets will be able to support four or five local broadcast-TV stations, and we think some of the weaker ones may fail" in a few years. The TV industry has long relied on political advertising in election years. Local "spot" TV ad revenue -- defined as spending in local markets by national or local advertisers -- typically grows at least 10% in election years and falls in off years, according to data from TNS Media Intelligence, which tracks spending in the top 100 U.S. media markets. This year, political advertising pumped about $216.1 million into the local TV ad market in the first quarter, more than double the $99.7 million in the first quarter of 2004, the last presidential election year, according to Evan Tracey, chief operating officer of the Campaign Media Analysis Group at TNS. Even so, overall revenues are down, in comparison to the 8.7% rise in local ad revenue the industry saw in the first quarter of 2004.
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