Broadcast revenue is up or down (or up AND down)

During a give-and-take email exchange with Business Week’s Heather Green over the past week, the subject of broadcasting revenue growth came up, and I told her it was down. She wrote back that it was actually up and asked me to explain. Well, it’s up or down depending on how you look at it, and an excellent report yesterday from BIA Financial Network, a Virginia-based financial advisory company, tells the story better than anything I’ve seen recently.

The story is that revenues are up 7.2% this year COMPARED TO LAST YEAR. The problem, of course, is that this is a no-brainer. Last year was an odd-numbered year (no Olympics and no political ads), and when compared to 2004, the decline is $300 million or approximately 1%, according to a story on the report in today’s MediaDailyNews. Here’s a wonderful graphic that shows the real picture:

© BIAfn, used here with permission
Mark R. Fratrik, Ph.D., Vice President, BIA Financial Network, notes in the press release that local television revenues are becoming predictably cyclical, with even years being up and odd years being down. He adds that one of the culprits is automotive advertising, which is painfully moving to what he calls “more contemporary mediums.” (Hmm. What does that say about broadcasting?)

The point, I guess, is that this is a time of great spin for the industry, and that if you want a realistic picture of what’s taking place, you have to look beyond the headlines. Dr. Fratrik points out that web revenues are a very small piece of the local ad revenue pie, but he expects that to grow significantly during the next five years.

“Local television stations are in precarious positions and must think creatively to drum up new revenue streams,” Dr. Fratrik said. “We believe there will always be a strong desire from the public to have access to local community and regional news. It is just a matter of the stations themselves identifying a mode in which consumers will be receptive to receiving it, and a method that can be profitable.”
And the key question for broadcasters is finding that “method” in a confusing and extremely liquid environment. Stay tuned, folks. These are interesting times indeed.

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