Stations’ Car Trouble

Nov 30, 2008  •  Post A Comment

In the past decade, New York’s TV stations have survived lousy network programming, a vanishing prime-time audience, media fragmentation, the economic fallout of Sept. 11 and the writers strike.
Whether they can make it through Detroit’s collapse is another story.
With the nation’s carmakers and dealers in economic freefall, local TV’s biggest advertising category has plowed into a wall.
Industry insiders report ad revenues for New York’s six English-language stations plunged a historic 33% in October. The only worse month was September 2001, when revenues fell 45%. Stations are expected to end the year down as much as 15% to 20%.
For decades, proud flagships like WNBC, WCBS and WABC generated millions of dollars that their network owners could use to pay for high-priced programming. New York TV billings totaled a healthy $1.5 billion in 2007, according to research firm BIAfn.
The stations are still profitable, but that model has been kneecapped by competition with cable and the Web, and slammed by a reeling economy. Media buyers don’t see the business recovering any time soon.
“Even if things turned around, it’s not going to be where it was last year for a long time,” said Laura Kollappallil, associate director, local broadcast, at ad agency RJ Palmer.
The falloff in advertising, which began earlier in the year, has taken a toll on stations’ parent companies.
“Business models that rely solely on ad revenue are proving themselves outdated,” said Anthony DiClemente, entertainment analyst at Barclays Capital. Cable’s subscriber-fee revenue stream puts local TV at a disadvantage, he added.
Most local stations remain moneymakers. Although profit margins no longer approach the 50% they once did, they’re often better than 30%.
“If CBS said tomorrow, ‘We’re going to sell all our stations,’ there’d be 20 buyers lined up,” said Larry Patrick, managing partner of media brokerage Patrick Communications. “Even in bad times, these stations are worth a great deal of money.”
But they are worth less than they once were, and their value will continue to erode, analysts say.
Once the economy stabilizes, important ad categories likely will bounce back. But the auto category, which traditionally accounted for 30% or more of ad revenues in New York, might never return to its previous spending levels.


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