Bernstein: Broadcasters Once Again Have a License To Print Money

Most forecasters have expected broadcast ad revenues to experience a nice recovery as the recession eases, but Bernstein Research analyst Michael Nathanson expects a TV advertising to see a rebound that could bring stations back to their healthier 2007 levels.

While the major station owners took a big hit on revenue declines last year, margins remained fairly strong. But he also warns about the possibility that the Federal Communications Commission might levy spectrum fees or ask stations to give up parts of the spectrum in exchange for auction proceeds. The best hope for broadcasters is that retransmission fees from their local cable MSOs. Broadcasters can't have it both ways anymore, Nathanson writes, saying that stations' arguments boil down to: "Please pay us for our channel but allow us to keep all this free (and valuable) broadcast spectrum for ourselves. Given that less than 10 percent of the nation's household watches TV over the air, it is likely time to reclaim this spectrum over the next decade."