MATRIX LOCAL TV SALES REPORT

1Q Spot Recap: Total +7.1%, Core +4.8%

Auto dealer advertising is the big booster, up 18% from the same quarter last year and almost 30% from 1Q 2012.

Continuing strong auto spending bolstered first quarter total spot revenue compared to the same period a year ago, according to Matrix Solutions. And core business, which factors out political, also showed healthy growth. Total revenue was up 7.1%, while core grew 4.8% from first quarter 2013.

“It’s continuing to be a pretty good story for the station business,” says D.J. Cavanaugh, president of Matrix Solutions. “As you look at the core business, it’s still showing good growth.

“The big story, in my mind, continues to be that automotive is coming back, it continues to grow, which is really good. When you see the tier 3 [local] dealers continuing to grow at the level they are [up 18% from 2013’s first quarter and up 29.5% from 1Q 2012], that’s a pretty good story for local television. It tells you that these advertisers are getting results with TV.”

Helping that tier 3 revenue was that of tier 2 (dealer associations), which posted a 7.9% increase from a year ago. Tier 1 (auto manufacturers), was down 7.2%.

Matrix is a Pittsburgh-based supplier of customer relations and sales management software. Its quarterly local TV sales report, exclusive to TVNewsCheck, is based on sales data from more than 400 client TV stations. It includes revenue from station-specific websites and digital subchannels.

The services category was another gainer, up 88%, but Cavanaugh cautions that clients are not uniform in their reporting. Some may put certain advertisers like Medicare under health care, while another may report them under services. However, he says lawyers and general services are certainly growing.

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Products were up 36.7%, driven by companies including Johnson & Johnson and Eli Lilly.

Another contributor to the quarter’s gains, Cavanaugh says, although harder to quantify, was spending during the Winter Olympics.

Among categories reporting decreases, perhaps the most worrying is quick serve restaurants (fast food), which fell 26% from last year’s 1Q. “I think you’re starting to see some of the big name companies like Subway, McDonalds, Wendy’s and Burger King starting to spend less,” Cavanaugh says. “There was a pretty good drop by the major players in that category. And it’s across the board; since they’re national chains, they’re doing that everywhere.”

Retail was also down (24.8%). Cavanaugh says “there, you’re starting to see some of the bigger players — Walmart and a few others — that are starting to cut back. Their spending seems to be down pretty large.”

He’s not sure of the reason for the retail cutback, but says it may be that some companies opted to not advertise during the Winter Olympics, preferring to spend their money in another quarter.

The nonalcoholic beverages category was down 34.1%, but Cavanaugh says spending in that category is “not huge,” so any drop will greatly skew the percentage. A couple of big players like Pepsi were down.

Government and organizations also dropped (-20.6%) due mainly to spending cutbacks by various state departments.

Looking forward, Cavanaugh says a category to keep an eye on is health care. “Whether it’s the big pharmaceutical companies, hospitals, insurance companies — those are the ones keep an eye now with everything’s that’s going on with the Affordable Care Act. We continue to watch that with a lot of interest … to try to get a sense of what the Affordable Care Act impact might be on the TV stations.”

Cavanaugh says “As we go forward this year, we’re probably going to see this political spending pick up, certainly as you get into the primaries in a lot of states, it will have a pretty big impact and we’ll see that category pick up and there will be a spill-over effect into other categories” as some advertisers choose to stay out of that and move dollars later.

Cavanaugh is upbeat. What I’ve seen over the last six quarters, is good steady growth for the industry. It bodes well.”

Broadcast TV Sales, 1Q Comparisons

Category Group 2014 vs. 2013 2014 vs. 2012
Alcoholic Beverages +13.8% +33.1%
Auto Total +8.2% +17.9%
      Auto — Tier 1 -7.2% -9.6%
      Auto — Tier 2 +7.9% +23.7%
      Auto — Tier 3 +18.0% +29.5%
Department Stores -1.3% +3.4%
Education +8.8% -1.4%
Financial, Insurance, Real Estate +11.4% +13.3%
Food -15.6% -15.4%
Furniture +1.4% +7.3%
Government & Organizations -20.6% -33.8%
Health Care +14.0% +7.8%
Home Stores & Products +11.5% +19.0%
Legal Services -20.8% -19.8%
Leisure & Entertainment +12.4% +8.9%
Media  -0.2%  -5.0%
Non-Alcoholic Beverages  -34.1%  -22.3%
Political  +285.3%  -29.9%
Products  +36.7%  -13.5%
Restaurants — All  -19.7%  -20.9%
     Restaurants — Quick Serve  -26.6%  -28.7%
     Restaurants — Dining  +11.5%  +16.8%
Retail  -24.8%  -23.7%
Services  +88.1%  +75.9%
Supermarkets/Grocery  -0.2%  +30.1%
Telecommunications  -2.0%  +10.8%
Travel  +5.3%  -4.8%
GRAND TOTAL  +7.1%  +4.9%
EXCLUDING POLITICAL  +4.8%  +6.6%
Source: Matrix Solutions    



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