MATRIX SPOT REPORT

First Half Results: Total, +10.4%; Core, +3.9%

Heavy political spending and the recovery of the auto market account for the  growth in the six months ending June 30, according to actual sales data collected by Matrix Solutions. Auto was up 18.4% with dealer associations contributing a 24.3% gain. But many other categories sunk. Packaged goods and telecommunications were off 11.36% and 10.06%, respectively.

Thanks to heavy political spending and resurgent auto spending, broadcasters enjoyed a double-digit, year-over-year gain in advertising revenue in the first half of 2012, according to Matrix Solutions.

Total spot rose 10.4% for the six months ending June 30. Core spot, which excludes political advertising, was up 3.87%. The figure are slightly higher than the industry consensus forecast published by TVNewsCheck last September — 10.2% total, 2.7% core.

Matrix is a Pittsburgh-based supplier of customer-relations and sales management software.

Its gain-loss percentages in 15 major ad categories and five subcategories include revenue from station-specific websites and digital channels and are based on actual sales data from more than 400 client TV stations that billed more than $2 billion in the six months.

Through an exclusive arrangement with Matrix and starting with this report, TVNewsCheck will publish updates on station spot revenue growth or decline at the end of each quarter.

For its clients, Matrix is offering a further breakdown on the revenue — by category, affiliation, market and region.

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As the chart below shows, political was up nearly 400% in the half, but the category is locked into a two-year cycle — heavy in even-numbered years when most elections are held and light in odd-numbered years.

Among the perrenials, auto was up 18.4% with dealer associations contributing a 24.3% gain.

But most other perennials were in the red with packaged goods off 11.36% and telecommunications off 10.06%.

Matrix President D.J. Cavanaugh says that broadcasters ought to be encouraged by the numbers, particularly the 3.87% core growth given the sluggish economy. “The business is OK.”

The growth was driven by the auto sector that is recovering from the Japanese earthquake and tsuami in March 2011 that disrupted Japanese manufacturing and parts supply and suppressed sales for most of the years. “It really had an impact, even domestically,” says Cavanaugh. “Everybody got hit by that because of parts.”

Leading the 2012 rebound in the sector were the Toyota and Honda dealers associations, he says.”Those numbers were through the roof.”

Despite the improved performance, auto still has a way to go before it fully recovers. It has yet to return to 2010 levels, let alone 2008, he says. “They are coming off a really bad year in 2011.”

Cavanaugh concedes that core would be flat or worse if you took auto out of the equation on the ground that its growth was anomalous. But he says that kind of parsing is unfair. In any given period, developments in a category or two might justify discounting it, he says.

“You can make the numbers say whatever you want. If I was just purely promoting the TV business, I could make it look better by eliminating this or that. Conversely, if I wanted to beat up TV, you take out this or that and it’s terrible.”

In future releases of the quarterly growth numbers, Cavanaugh expects to be able to discuss spending activity of individual companies. Such discussion will explain the category changes, plus or minus.

Spot Revenue, First Half 2012 Vs. 2011

Category                                                    % Chg.

Auto Total                                                 18.36%

Auto, Tier 1                                                12.58%

Auto, Tier 2                                                24.32%

Auto, Tier 3                                                18.44%

Political                                                     394.25%

Restaurants Total                                    -3.94%

Quick Serve                                               -3.72%

Other                                                         -4.80%

Health Care                                              1.14%

Furniture                                                  5.18%

Financial, Insurance, Real Estate         10.23%

Leisure & Entertainment                       -2.59%

Media                                                       -5.06%

Retail                                                        -0.87%

Home Stores & Products                        0.84%

Telecommunications                              -10.06%

Services                                                  3.98%

Legal Services                                      -1.69%

Education                                               5.58%

Package Goods                                     -11.36%

Grand Total                                             10.40%

WITHOUT POLITICAL                              3.87%

Source: Matrix Solutions


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