As recently as December BIA Financial Network’s Mark Fratrik was predicting double-digit growth for TV station revenues in 2010 with the return of election spending, but now he’s projecting only a tiny gain. And that’s after a much bigger drop in 2009 than previously forecast.
The BIAfn analyst noted that the advertising climate has gotten worse since his previous estimate. “The expectation is that the economy won’t rebound until the very end of this year and advertising will take some time to come back, even after that,” Fratrik told RBR/TVBR. He also noted that automobile advertising isn’t likely to return to previous levels, since there will be fewer brand nameplates to advertise at Chrysler and GM.
Fratrik is now looking for 2009 TV station revenues (local and national spot combined) to declined to $17 billion – that’s a 21.2% drop in two years from the previous non-election year in 2007. And rather than a strong rebound in 2010, Fratrik is now predicting that revenues will gain only 0.6% to $17.1 billion.
Since 2010 will bring a return of heavy political spending, doesn’t that mean that he’s expecting core television advertising sales to drop again from the depressed levels of 2009?
“We don’t expect the early months of 2010 to be positive, unless it’s some primary [election] spending. It takes a while for advertisers to respond to a growing economy,” the analyst said. Looking further ahead, Fratrik is looking for “decent growth” in 2012, when mobile DTV revenues are expected to become significant, but that will be after another revenue decline in 2011.
Fratrik’s report was not without some good news. In reviewing data from 2008 he found a lot of local markets were revenues were up in a down year for the industry. A lot of that was driven by election geography, so some of those markets could suffer greater declines in 2009 than the industry as a whole.
Fratrik’s long term view is that the television industry has to transform itself to enjoy future growth. “Since 2003 TV revenues have held steady but are now beginning a dramatic downward shift. This corroborates our calls for transformation as the only path to expansion for the industry. This will come from cross-platform growth and real energies put into finding local advertising revenues available through mobile and online advertising,” he said. Not surprisingly, those are going to be key topics at BIA’s upcoming “Winning Media Strategies” later this month in Washington, DC.
RBR/TVBR observation: We wish we could disagree with Fratrik’s projections. But the way things are going, we just hope he doesn’t have to drop his numbers any more as this year goes on.