Moody’s sees growth in television station revenues


A new report from Moody’s Investors Service says the fundamental business outlook for the US television station business is stable and the credit rating firm expects TV station owners and operators to have modest growth in advertising revenues in 2010 and 2011.

“Although the U.S. economic recovery remains precarious, stabilizing conditions, and the twin boosts of political advertising and the Winter Olympics will help broadcasters in the year ahead,” said Neil Begley, Moody’s Senior Vice-President.

Overall, Moody’s expects US broadcast TV advertising revenue to grow by 2.5- 7.5% in 2010, a stabilization of core ad revenues as compared to double-digit declines in 2009, said the report. Advertising budgets have also stopped falling as the US economy is showing signs of stabilization, and consumer confidence seems to be improving, it noted.

“Robust political advertising in 2010 should benefit most broadcast markets, given the large number of congressional and gubernatorial contests,” said Begley. The recent Supreme Court ruling that threw out existing limits on corporate political-campaign spending could also turbo charge this advertising segment if Congress doesn’t enact new legislation to introduce new limits, he added.

Despite these favorable trends,Moody’s said economic weakness and high unemployment will continue to challenge core medium- and small-business advertisers. The fortunes of broadcasters in the year ahead will almost entirely be determined by the extent of recovery in core advertising segments like automotive and retail, the report noted.

“It may take three to five years for the local-advertising market to recover fully from the severe contraction that accompanied the recession,” Begley said. For 2011, the ratings agency expects that ad-revenue growth will be flat to up 5%.

Beyond the health of the advertising market, Moody’s said it also remains concerned about the continuing receptiveness of bond markets to issuance by broadcasters.

Overall, the rated pure-play TV broadcasters have about $3.6 billion of debt maturities through 2014, or 68% of their total debt outstanding. However, some broadcasters are finding it easier to refinance their bank debt with long-term bonds, improving their liquidity profiles and financial headroom and allowing time for operating performance to improve, Moody’s noted.

The full report, “U.S. Broadcast-TV Stations to Get Boost from Elections, Olympics in 2010,” is available at

RB R-TVBR observation: More affirmation of what we’ve been hearing from multiple sources for some time now. The worst is behind us and ad spending is rebuilding.