TV and Radio Stations Prep for Tougher Times in 2009

First quarter has never been a big money-maker for local media. In 2009, that holds even more true. As the economy turned recessionary at the end of 2008, radio and TV stations began to step up staff cuts and initiate drastic cost-savings measures. At the same time, broadcasters slashed advertising rates, creating perhaps one of the best buyers’ markets ever. The only catch: advertisers are still overly cautious, holding onto dollars until the last minute. And both buyers and sellers have their fingers crossed for some sort of a recovery in 2010. “It’s a very competitive marketplace. Stations are ready to price to levels that we haven’t seen in a long time,” said Ellen Drury, president of local broadcast for GroupM Matrix. “That’s good, because in the long run, that could bring in more local clients in the market that maybe sat on the sidelines.”Economic and market conditions have prompted more than one prognosticator to revise downward what were already grim forecasts for 2009. Instead of a 2 to 5 percent decline, the Television Bureau of Advertising is now predicting total TV spot advertising to plummet 7 to 11 percent. Radio, a medium 80 percent dependent on local advertising, is headed for its worst year since 1954 when the Lone Ranger ended its run. Last week, BIA Advisory Services threw away its forecast of a 3.1 percent decline and predicted radio revenue would plunge 10 percent, to as low as $15 billion. A huge chunk of local broadcast’s bread and butter—automotive advertising, which used to add up to 25 percent of a typical TV station’s revenue and 15 percent of local radio’s—is disappearing, having shrunk an estimated $4 billion since 2005, according to TNS Media Intelligence. Retail, another huge category for local media, is also suffering. According to a TNS Retail Forward report, same-store sales in November declined 2.5 percent for some 40 retailers. For the first nine months of ’08, Macy’s, Home Depot, Lowe’s, JC Penney and Best Buy all slashed ad budgets, according to Nielsen Monitor-Plus.One silver lining in all the bad news: retailers, who in recent years added stores and took their advertising national, may now shift more dollars back into local as they close stores or spend less on ads. “National TV networks and cable have benefitted from the nationalization of retail, but that trend isn’t so solid all of a sudden. There’s a pause in that momentum, and there may be an opportunity,” noted Chris Rohrs, president of the TVB. Other categories on which local broadcasters are pinning hopes include grocery stores, fast food, casual dining, and entertainment, particularly cable and TV tune-ins. Also helping to offset the drop-off is growth in online revenue, as stations expand their Web offerings. The problem is, online still comprises only 3.5 percent of revenue for radio and TV stations, according to Borrell Associates.

Convergent TV

TV and Radio Stations Prep for Tougher Times in 2009

Katy Bachman

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Katy Bachman