Outlook 2008: Local TV

NEW YORK If there has to be a local ad recession, it is best that it happen in an election year. Despite the slowing economy and shrunken auto category, those factors won’t impair the spot TV market, which stands to benefit from the presidential race and the Beijing Olympics.

After 2007 ad revenue rose about 6 percent year over year, per the Television Bureau of Advertising, analysts were sticking to bullish 2008 forecasts of 9 to 10 percent growth. Local TV is projected to get 60 percent—in the neighborhood of $2.7 billion—of the $4.4 billion to $4.5 billion political ad outlay, according to Wachovia Capital.

Large station owners with network TV affiliates, including Hearst-Argyle Television and Gannett Co., stand to benefit most, according to Bear Sterns. Political will contribute 12.1 percent of revenue for Hearst-Argyle, 13.1 percent for Scripps and 17.3 percent for Gray Television.

It also will be a pivotal year for stations as they position for the long-awaited transition to digital on Feb. 17, 2009.

In 2007, stations rolled out lifestyle Web sites for sports, search and more. “TV stations have entered a period where we can say we have come into our own as a primary Internet stop for our community,” says Andy Fisher, president of Cox Television. “The mother ship is still the critical source of profit, but digital is now a significant piece of revenue, and that allows us to make up for supply and demand.”

Stations are also expanding into out-of-home digital video. CBS, ABC and NBC are providing content to digital networks in grocery stores, doctors’ offices, taxis, transit locations and elsewhere.

Late in 2007, TVB rolled out ePort, the industry’s open-standard e-business platform, which has the support of 605 stations representing 96.1 percent of the U.S. In 2008 the platform is expected to expand to handle all 11 steps of the buying process, from avails to invoicing—including buys on a station’s digital channels. “If we’re serious about growing our core business beyond broadcast, we have to support that with an infrastructure,” explains Paul Karpowicz, president of Mere-dith Broadcasting.

Another complication: Next year, Nielsen Media Research will roll out five more LPM markets, for 18 total. Says Sue Johenning, evp, director of local broadcast at Initiative: “There are always bumps in the road as we make the transition to LPMs, and that just adds another dimension to a volatile year.”