Faced With Unprofitability In ’25, Station Groups Must Pivot Now

Some local station groups must lean into creativity, experimentation and the prospect of divorcing their networks if they’re to survive an ominous 2025.

Hank Price

For more than two decades local television has been a biennial business, feasting on political ads during even years, fasting during odd ones. This feast/fast nature has become baked into the business and is seen as simply a fact of life. Higher profits during political years, lower profit during odd ones.

But something about the odd/even cycle changed during the fourth quarter of last year. Some of the publicly owned television groups reported not just lower revenue, but actual losses. We’ve seen broadcasters report losing quarters before, but always during severe recessions, not in more normal times.

Wall Street’s reaction was immediate and negative. Several television group shares now trade for the cost of a fast food breakfast.

Part of the problem is the massive fragmentation of national advertising, which is affecting the entire media industry. This is not an aberration, but a seismic shift. With everyone from Netflix to hundreds of FAST channels competing for ad revenue, dollars are spread thin.

But the core issue with last quarter was more than just national advertising, which has been in decline for years. For groups to report a loss, their much more important local sales products must have also underperformed. Local advertising is the backbone of station revenue, so any deficiency is cause for concern.


Local television’s other revenue stream, retransmission consent, is also under attack. Cord cutting, lower vMVPD rates and unfavorable affiliation contracts are all chipping away at profits.

Add to all this the possibility of a major MVPD going out of business. Charlie Ergen’s recent announcement that EchoStar may not be able to continue as a “going concern” is the latest threat to stations. Should DISH exit the market, it would leave a massive audience of older, rural subscribers with over-the-air service only. That would take a huge bite of retransmission revenue. DirecTV would gain some of those subscribers, but how many?

And just to get all the bad news out of the way, network owners continue to divert billions of dollars in station program payments from over-the-air program development to their streaming services.  Because of this, several television groups reportedly plan to try to renegotiate their affiliation contracts, but one wonders what incentive the networks might have to change their business plans, especially after Paramount’s recent announcement that Paramount+ is on track to reach profitability in 2025.

Put all this together and we have a record political year with strong profits in 2024, followed by the possibility of some groups becoming unprofitable in 2025.

This is not good news. Local television is a critical public service that is far more than just a business. It is part of the fabric of the communities it serves. That kind of service will only continue if the best stations have the resources to produce first-class news and information.

For local television stations to keep operating at the highest level, owners need to do more than simply continue business as usual. Now is the time to put all options on the table, to look beyond today’s norms, to genuinely innovate, to even take calculated risks.

Forgive my heresy, but should some stations explore life without a network affiliation? WJXT in Jacksonville, Fla., made that decision years ago and has done well since. Of course, WJXT was a market-dominating CBS affiliate at the time, so dropping network service was done from a position of strength. Since then, CBS has never regained its former vigor in Jacksonville.

And think about this: The Disney/Fox Corp./Warner Bros. Discovery joint sports streaming announcement foretells a time when all major sporting events could very well be sold directly to consumers. If sports eventually go away, what real network value is left?

Would the Jacksonville scenario make sense for a station that is upside down in its affiliation agreement today? Probably not, but that could well be the case sometime down the line.

What would a future, locally programmed station look like? Possibly like the nascent FAST channels proliferating across every station group. Some of those products are quite watchable. That makes local FAST channels far more important than just added revenue. They are one way to develop the future without changing the current structure.

None of this is news to the major groups. One assumes they are already considering what a local television station might look like in the future. There are many possibilities, but one thing we know for sure: Today’s endless repeats of local news is not the answer.

The roots of local television are creativity, experimentation and a strong belief in the future. Our industry needs to recommit to those ideas, stop playing defense and start building something even better than what we have today. Let’s hope the best groups are working on that right now.

Hank Price spent 30 years leading television stations for Hearst, CBS and Gannett while concurrently building a career in executive education. He is the author of Leading Local Television and two other books.

Comments (4)

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Kathy Haley says:

March 12, 2024 at 8:19 am

Hank: Losing a network affiliation used to mean the station’s value would decline by about 50%. Is that still true? What is WJXT’s cash flow multiple, should it be sold, compared to the cash flow multiples of affiliates in Jacksonville? Thanks for your thoughtful column.

BeyondTheBeltway says:

March 12, 2024 at 10:09 am

Look for more station groups to be taken over by foreign ownership. Sadly, that is the path of least resistance. The FCC is now allowing up to 100% foreign ownership. But, why would a foreign “investor” want to buy a broadcaster in an industry that is struggling? Answer: for reasons other than making a profit. Also, it’s nearly impossible to know who the foreign owner groups really are. US broadcasters must not be permitted to sellout to foreign control. This is worse then US Steel being sold to Japan. US Steel doesn’t effect public opinion.

TV broadcasters must learn to adapt to the new market conditions or sell out to American owners who can. TV isn’t dead but it cannot stay the same. Stop fighting the last war. Producing local programming is a lot of work. That is what it will take to turn things around. Broadcasters have gotten lazy simply being repeater transmitters for national networks. The Internet has made that function obsolete. The concentration should be all things local. Local talent shows, shopping shows, call in shows, viewer created shows … don’t be afraid to fail. Start on one of your sub channels.

jcrollman says:

March 12, 2024 at 10:32 am

Broadcast networks stopped producing quality content years ago. Cheaply produced reality shows and Law and Order retreads kept the lights on, but at the cost of long-term irrelevancy. What exactly do the broadcast networks even provide at this point? Stations need to focus on hyper-local investigative journalism and community outreach. Maybe in partnership with local papers. Stations’ on-the-ground presence is the one thing that makes them unique and could provide consumer value along with serving the public interest.

Former Producer says:

March 12, 2024 at 1:17 pm

Hank, you suggest that local television’s survival as a “critical public service” is to “produce first-class news and information.” I think that is a great suggestion.

But let’s be real. The broadcast TV industry is not willing to pay for that. Have you seen what the likes of Nexstar and Sinclair are willing to pay for people needed to “produce first-class news and information?” It’s as little as $15/hour.

The executives in this industry are not interested in solving the problem. They are interested only in their annual bonuses and the quarterly reports. I predict, by 2025, those executives will start to cash out and let someone else deal with this mess.