The State of the TV Station Business

THE STATE OF THE TV STATION BUSINESS
[SOURCE: tvnewsday, AUTHOR: Harry Jessell hajessell@tvnewsday.com]
Lets face it: TV broadcasting has seen better times, but it's still a healthy business with great prospects. Here's the bad and the good and a few ideas for making it better. First the bad: The business hasn't been able to stop the erosion of non-political national spot revenue -- still a third of total revenue. Political advertising keeps growing -- it topped $2 billion in 2006 and is expected to reach new highs in 2008. But that growth masks the weakness in many of the other major ad categories and the quickening loss of network compensation. Broadcasters have yet to discover the key to DTV riches. They made the capital investment, but after 10 years of on-and-off experimentation, none has come up with a sure-fire way to recoup the expense. Local HD is another big expense with no obvious payoff, retrans cash is still elusive, the FCC is disinclined to award multicast must-carry rights and the newly empowered Democrats in Congress may crack down on TV violence and move to restrict advertising of pharmaceuticals, fast food and political candidates. The good: Cash-flow margins for most are still extraordinarily high, and broadcasters have been able to maintain healthy margins by using technology to cut payroll and other costs. Another trick is to run two stations out of one shop -- duopolies and virtual duopolies. TV stations have the programming that everybody wants to watch -- local news, The Guiding Light, Oprah and primetime. You might be able to see Ugly Betty on cable or Lost on an iPod, but you'll see them first on the local affiliate.
http://www.tvnewsday.com/articles/2007/01/23/daily.3/

See also --
* Limited Upside Seen For Big Media
[SOURCE: Forbes.com, AUTHOR: Joshua Lipton]
Market analysts see less upside ahead for media conglomerates. “While reports of the death of traditional ad media have repeatedly proved premature, they continue to slowly lose share and nothing seems likely to change the trend. History dictates that ad dollars follow eyeballs with a lag, and eyeballs continue to migrate away from traditional media.” Riding to the rescue of these companies could be cash-heavy private equity firms.
http://www.forbes.com/markets/2007/01/22/big-media-earnings-markets-equi...