Future Of TV Stations Includes Different Ad Prospects

COMMENTARY

• by Wayne Friedman , Staff Writer, 7 hours ago

Local TV station groups have a lot to be happy about — rising stock prices and more money from retransmission revenue. And something that isn’t always mentioned: scale.

Local TV advertising revenue of $20 billion a year is a beneficiary of that scale -- even as core advertising continues to be projected with small gains.

Traditional local TV advertising -- ad revenue that doesn’t include every-other-year rises from political advertising revenue -- is estimated to see a 2% rise next year, according to Marci Ryvicker, media analyst of Wells Fargo, speaking at a local TV conference.

Underlying new sources of revenue -- in theory -- will continue to alter the picture, including retransmission fees from pay TV providers.

That also includes new license deals for carrying TV stations on new virtual pay TV providers, where DirecTV Now, YouTube TV and others are focused on ensuring that network-programmed TV stations are a primary part of their services.

Retrans fees now account for 30% or more of some TV station groups' overall revenues. The downside for stations is that TV networks want to grab even more of this new retrans fee money from their affiliates. The current 50-50 split is looking to rise -- in the networks’ favor.

In addition, TV station groups still hope to benefit from deregulation under the new Trump Administration, where the limits of one company owning U.S. TV stations could grow dramatically.

While advertising seems to be taking on a different, somewhat smaller role, the broadcasters hope the new TV transmission standard ATSC 3.0 -- expected online in the next few years -- will be the platform where programmatic and/or addressable TV advertising could dramatically grow.

Digital media -- albeit still a small part of the overall picture -- could benefit here, too.

From all this, TV station groups stock prices, according to Ryvicker, have grown 25% to 35% since the presidential election, even accounting for recent dips.

While many criticize TV stations for their slow-moving efforts in the new digital world, TV stations’ scale remains a positive factor -- especially against some digital media competitors.

Ryvicker says: "Scale is really important.” But there are qualifiers here. “It's getting bigger in markets where you really have control, and you can really sell your advertising.”

If the new Trump Administration has its way, that's what's coming...