TVB forecasts big gains two years out

Total spot for TV stations is expected to decline 2-5% next year without the Olympics and federal elections, but the Television Bureau of Advertising (TVB) still sees double digit gains for station websites and wireless operations. Then look for a 6-10% jump in spot in 2010 as the two-year cycle goes into another election-Olympics year.

“The structure of the business has changed dramatically because of the Olympics switching to a two-year frequency and because of the growth of political advertising in Spot. Odd years will always face tough comparisons to even years, when spending on both the Olympics and political ads show up. Spot TV is a two-year business cycle,” noted TVB President Chris Rohrs in unveiling the two-year forecast.

The view from TVB is that the 2009-10 market will be shaped by consumer confidence and spending, energy and food prices, debt and credit problems, the real estate market and the identity of the new political leadership elected in November. Key categories will be automotive, political, retail, telecom and financial.

TVB derives its forecast from a consensus of Wall Street and financial analysts, station representative firms, and independent TVB research.

The bounceback is expected in the even-numbered year to follow.

In reviewing the odd-even cycle of years, Rohrs showed that this year, 2008, is still likely to come in flat, due to $2.25 billion in political spending, while non-political core revenues are likely to be down 7.4%. Core is expected to be up 3.1% in 2009, but with very little political the total is expected, at the mid-point of the TVB forecast, to be down 3.5%. 2010 will again have political along with 2.6% core growth for a mid-point target of 8% overall.

Rohrs also showed how the local TV station revenue model is changing. Advertising is expected to account for 93.8% of revenues this year, with Internet contributing 4.4%, retransmission consent 1.7% and mobile a mere 0.1%. Two years out, advertising, while up more than a billion bucks from this year, is projected to account for 89.8% of revenues, with Internet growing to 5.8%, retrans to 3.5% (that’s $1 billion) and mobile 0.9%.

RBR/TVBR observation: Those non-spot revenue streams are still small compared to advertising, but their rapid growth is sure good for the television station business model. Retransmission consent, Internet and mobile video are projected to account for slightly over 10% of TV station revenues in 2010 – and that’s even after spot gets a healthy boost from the next Olympics-election cycle.