Monday, February 16, 2009

Local TV in decline

There was a time when being granted a license to operate a TV station was equivalent to having a license to print money -- with margins as high as 50%. Local TV stations, especially network affiliates made tons of money regardless of how they were managed or marketed. There was no way they could fail.

Of course, pretty much the same was once true of newspapers. But not anymore:
LAS VEGAS -- Lisa Howfield, general manager of KVBC, the NBC affiliate here, watched last year as the broadcast-television business began to shrink. She started cutting. She combined departments. She made do with old equipment, and did away with luxuries like yearly sales getaways.

In December and January, she laid off 15 employees, or 6% of her staff. After the weatherman left last month, one of the morning news anchors took on both jobs. "It's like a bad roller-coaster ride," says Ms. Howfield. Her station's full-day viewership is down 7.7% this TV season from the same period last year, according to Nielsen Co., and Ms. Howfield expects her ad revenue in 2009 will be down 30% from 2008.
To the combination of media fragmentation exacerbated by the economic and advertising downturn, you can now add the threat (beginning to be openly discussed by network honchos) that the networks may decide they don't really need local affiliates, given the levels of cable/satellite penetration. Why, the networks are asking themselves, should we split the (shrinking) ad revenues with the affiliates, when most of their viewers are watching us on cable? Why not just switch our programming to cable and keep all that lovely money for ourselves?

This probably won't happen in the next couple years (as the article makes clear), but it will happen reasonably soon. When it does, another important medium for local advertising will decline, pushing still more trade funding into the store.

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