It will be a “solid year” for the TV industry.
That’s the declaration presented Monday (4/30) by BIA Advisory Services, which released its 2018 U.S. local advertising forecast.
According to BIA, local television station revenue will rise to $27.7 billion, from $26.2 billion in 2017.
The breakdown of ad revenue includes:
- $18.2 billion for over-the-air revenue, up 5.8% from 2017
- $1.1 billion for digital revenue, a “modest increase” of 6.3% since last year, says BIA.
Also a significant revenue driver for companies such as Nexstar Media Group, Gray Television, and Sinclair Broadcast Group: retransmission fees from MVPDs, which have risen significantly over the last several years — much to the consternation of the American Cable Association and its members.
According to BIA, retransmission consent agreements between local television stations and cable/satellite companies will contribute $8.44 billion to the total industry revenue this year.
BIA predicts that on a market-by-market basis, retransmission fees will continue to rise over the next five years, based on specific household growth rates, as well as expectations on price increases and consumer behavior. But, it is not retransmission that is the fuel behind broadcast TV’s revenue.
Instead, it is the quest for registered voters to select a particular candidate come Election Day in November.
“We anticipate political advertising will generate significant ad revenue for local television this year, in particular for over-the-air revenue,” said Dr. Mark Fratrik, SVP and chief economist at what is now being called BIA Advisory Services. “Of all media, television still dominates in political years, even as campaigns integrate more digital advertising into their overall strategy.”
That said, TV is working to “offset generally flat over-the-air revenue” by expanding its multiplatform advertising offers “to deliver content effectively in today’s multi-touch point content ecosystem,” Fratrik noted.
In particular, television is increasing its share of location-mobile advertising. BIA estimates that location-targeted mobile ad spend will be $22.1 billion in 2018, which includes $3.1 billion of additional mobile advertising sold by traditional media players, including television broadcasters and other traditional media.
“Mobile advertising is a smart play for television because it offers a unique opportunity to leverage existing assets such as news and weather through sponsored mobile websites and applications,” said Fratrik. “These types of efforts are important as over-the-top – or OTT — services continue to attract viewers.”
Fratrik concluded, “This year will be particularly interesting to watch in terms of political and digital. Local television is at a juncture where strategic decisions will be key to their success.”
BIA notes that 1,200 commercial TV stations and all of their multicast programming streams are included in its forecasts.
BIA has formally dropped the “BIA/Kelsey” some 9 1/2 years after BIA Financial Network acquired The Kelsey Group.
