Rebound from last year’s 8% drop to come primiarily from campaign spending in states with heated gubernatorial and senate races.
Television station revenues in 2006 will increase by more than 7%, generating an estimated total of $22.2 billion for the year, according to projections by BIA Financial Network, a Chantilly-Va.-based financial and strategic advisory firm serving the media and communications industries.
This rebound from last year’s almost 8% slump is expected to come primarily from markets in states with competitive senate and gubernatorial races, consistent with the two-year pattern that BIAfn has observed for several years.
By comparison, in 2005 television market revenues totaled $20.7 billion, a 7.5% decrease from 2004.
“We’re finding TV market revenue becoming more predictably cyclical, and, even more so, affected on a single category of advertiser for growth,” said Mark R. Fratrik, vice president, BIAfn.
“Whereas the market used to be able to count on automotive advertisers increasing advertising expenditures every year, in some cases we’re seeing those additional dollars moving to other, more contemporary mediums and television broadcasters having to rely on political advertising in even numbered years for any meaningful annual revenue growth.
“Still, with the overall economy growing at a consistent pace, television revenues will not decrease dramatically in 2007, and should continue to increase strongly through the 2008 elections.”
The new media environment is placing tremendous challenges on local television stations. Some local broadcasters are experimenting with mobile video and text services. Other stations have entered into agreements to provide additional programming services to local cable systems and others are demanding retransmission consent payments from local cable systems.
“Local television stations are in precarious positions and must think creatively to drum up new revenue streams,” Fratrik said. “We believe there will always be a strong desire from the public to have access to local community and regional news. It is just a matter of the stations themselves identifying a mode in which consumers will be receptive to receiving it, and a method that can be profitable.”
At this point, relatively small dollars are being generated by most broadcasters through these new applications. But BIAfn expects this to change significantly over the next five years. In certain circumstances, a smaller broadcaster may be able to generate up to 25% of its revenue and 40% of its cash flow from these new applications.