Station Signs Look Good

May 1, 2006  •  Post A Comment

First-quarter earnings for companies that own television stations indicate 2006 may be good for local TV. A lift from Super Bowl and Winter Olympics advertising revenues kicked off a year that will benefit from political campaign ads come fall.

Quarterly results released last week by four station-owning companies show that even before the political dollars begin flowing in, stations are seeing an upswing in advertising revenue.

TV stations owned by E.W. Scripps, Meredith and McGraw-Hill all posted increases in the three months ended March 31 that were in the high-single-digit to double-digit range. CBS Corp. also posted an increase, though it was more modest due to its decision to hold back on airing first-run episodes during the Olympics coverage.

Revenue gains for TV stations in an even-numbered year are not surprising. The Olympics and political campaign dollars often provide local stations with a revenue bump in even years. During the odd-numbered years, the absence of those two contributors often leads to revenue slumping.

Political advertising has yet to gather momentum this year, as the real spending often takes place as Election Day nears.

Meredith President and Chief Operating Officer Stephen Lacy said that his broadcasting results reflect “growth in the fundamentals of the business.” Meredith has been able to capitalize on its ratings success from producing more hours of local news, Mr. Lacy added.

Meredith’s 14 stations posted a 9 percent increase in revenue to $75.9 million in its fiscal third quarter, while segment profit surged 24 percent to $20.1 million. Scripps’ 10-station group reported a 16 percent increase in first-quarter revenue to $83.8 million, while segment profit surged 38 percent to $22.5 million.

At McGraw-Hill, which owns four TV stations, first-quarter revenue rose 20 percent to $29.2 million. CBS’s TV stations reported a 3 percent increase in first-quarter revenue, though the company did not provide specific numbers for the stations.

The results from the four companies illustrate the see-saw effect that television stations endure as they go from odd-numbered years, in which stations face the double whammy of no Olympics coverage and the absence of significant political advertising spending, to even-numbered years, in which both the Olympics and political advertising play a huge role in financial performance.

A year ago, Scripps’ stations reported a 6 percent decline in revenue from the 2004 first quarter, while McGraw Hill’s stations slipped 2 percent in the same period. Meredith’s stations posted a 1 percent increase, driven largely by the effect of two newly acquired stations. CBS, which a year ago was part of Viacom, posted a 5 percent decline in its overall television business, largely driven by declines in political and nonpolitical advertising.