Stations See Growth From New Rev Streams

While revenue from core local and national spot is on the rebound, broadcasters are pleased that they are also are seeing retrans and digital revenues becoming more significant.

Sure, the television spot business is recovering from what many people have branded “The Great Recession,” but TV executives at the SNL Kagan TV and Radio Finance Summit today in New York see new revenue streams adding to that positive momentum. So even with a slow national economic recovery, the TV business is looking attractive for the next several years.

The core business, of course, is still local and national spot. “That for us, we think over the next five years, is sort of a low- to mid-single digit growth rate,” said Peter Markham, chairman-CEO of Granite Broadcasting. Other panelists seemed to agree with that assessment, but retransmission consent revenues are growing at a must faster clip and digital revenues, while still small, are becoming more significant. Markham noted that digital revenues doubled for his company over the past two years, with growth continuing.

“We’ve got five revenue streams now, where 10 years ago we had one,” noted Robert Prather, president-COO of Gray Television. “We’ve got our regular channel, we’ve got multicast, we’ve got retrans, we’ve got digital and we’ve got mobile. So I think the revenue streams are great going forward.” But he also noted that broadcasters now have more competition than ever before.

With the networks now sharing in retrans cash, Markham noted that the nets have “throttled back” on the content they’re placing on online sites such as Hulu and Netflix. But that doesn’t mean that broadcasters don’t still face new media threats.

“I think the two probably biggest threats out there on the horizon are Apple TV and YouTube,” Prather said. “I think both of these could be devastating competitors if they can figure it out. So far they haven’t, but they’ve both got hundreds of millions of dollars to play with and if they can [figure out the business model] I think they will really be a real threat to all of us down the road somewhere.”

But for now, digital media is a growth area for broadcasters, despite the potential new competition, and that’s changed how broadcast sales staffers relate to their clients.


“When we go out, we’re looking at our mobile apps, we’re looking at our D2s, we’re looking at our websites, we’re looking at extensions of our websites where we may have some specialized areas that are within that website, like political, areas that we will brand on our own websites. And then we can take out to them a menu of things that we can help them with, so that if they’re interested in doing them, we can charge for our services to help them understand how to do Facebook,” said Deborah McDermott, president of Young Broadcasting. “There’s going to be a menu of things that we can take out, and our menu is growing daily.”

Echoing that view, Richard Schmaeling, SVP-CFO of LIN Media, said his company no longer views itself as just a TV company, although he noted that it is hard to change people’s mindset so that veteran TV sellers can sell other media as well. “We’re building momentum,” he said, noting greater “digital fluency” within the organization. “Over time, like Deb was talking about, our folks are trusted advisers to their local advertisers.”

The broadcasters were split over the idea of whether their digital operations might one day need to be separated from their core TV business to maximize growth.

“Our view is, over time — maybe in four or five years — our digital business will be of sufficient scale that it could be a free-standing enterprise. But that’s not our intent. I think it is an important building block for our local multimedia platform,” said Schmaeling.

Citing media forecasters who say that digital operations will have to be separated to thrive, Prather told the gathering: “I think we all have to make a decision at some point whether we want to create an entirely separate business in the digital area and really, kind of, take off with it.”

He noted the success of, owned by Cox Enterprises, which has operated independently from the magazines for which it was named. “Fifteen years later they’ve got $1.2 billion in revenue and the magazines are gone,” Prather said, adding that a good chunk of that revenue probably came at the expense of television stations.

For Univision Communications, though, Tonia O’Connor, president of distribution and sales, says the game plan is to have digital be fully integrated. “It’s really just about strengthening our brands. We want to be every place our consumer is.” And with an audience that she characterized as a generation younger than the company’s English-language competitors, O’Connor said Univision is very conscious of the need to keep up with its tech-savvy younger Hispanic audience.

Of course, no discussion of broadcast revenues is complete without mentioning political. Not surprisingly, the broadcasters were upbeat about predictions of record political advertising in 2012.

“We love political,” said Prather. And the Gray Television exec seemed to be only partly kidding when he said this: “I encourage all of the rich egomaniacs out there in the audience to run for office. It’s your civic duty!”

Comments (2)

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Christina Fleming says:

June 5, 2012 at 6:34 pm

10 years ago we had more than one Bob. we had spot, comp, production, tower rental, etc.

Brian Bussey says:

June 6, 2012 at 9:53 am

of course you love political. you dont pay commissions on it and you charge fat rates. the regulal advertisers you preempt dont matter. The bean counters running the station groups are giving away broardcast TV audience shares. No TV viewer needs internet icons on their TV screens. Thats bill gates dream. Zuckerberg has left a trail of people he stabbed in the back to get FB where it is..just ask his new stock holders. All this new money needs to be spent on programming, especially weekends, and the fringes. We dont have to lose any viewers. Nor do we have to interact with the web to watch a show. How long will it be before we see a web enabled tv doing broadcast Pay per view ?