Online revenue growth for local TV

A new report by Borrell Associates for the TVB is a mixed bag for the broadcasting industry. On the one hand, average annual station revenue moved up to $750,000 in 2010, but on the other hand, the majority of stations got less than $500,000. That means that those who are doing things right experienced significant growth, while the majority of others hovered far below. Borrell didn’t hold back in reacting to the findings, saying he was flabbergasted.

Groups like LIN, Raycom, Gray and Hubbard are actually very impressive. So many of the others are still viewing the web as an extension of their core product and think that their existing broadcast managers ‘get it’ and can actually grow Internet revenues. The numbers from last year prove them wrong. The fastest growing online revenues are coming from broadcast companies that have devoted significant resources to online and mobile initiatives. Sadly, most of them actually think that I’m referring to them when I say ‘significant.’ The litmus test is pretty simple. If your stations’ Internet revenues were above $1 million or grew more than 50% last year, welcome to the club.

Overall, online revenues for broadcast experienced double-digit growth to a record $1.4 billion. The top performing stations made between $5 million and $11 million.

rev share of pureplays shifting?TV station’s in-market share of revenue increased slightly to 10.4%, but perhaps an even bigger story here is that Internet Pureplay companies slipped back below 50%, perhaps signaling that the trend of these companies taking money from local markets has peaked. If true, that would be a significant turning point, but we’ll have to see what next year’s numbers look like before passing judgment.

Borrell is projecting significant local online revenue growth over the next five years, but a lot hinges on the revenue efficacy of the mobile Web. Another factor for broadcasters is noted in the report:

revenue growth through 2015
The stars appear to be aligned for local broadcasters as the Internet evolves from a medium most suited to newspapers and magazines to one that is more video-centric, suited to television.

Depending on how mobile goes, Borrell is projecting 17% growth in 2011, 33% growth in 2012 and 25% growth in 2013.

Who gets what, however, depends on how much broadcast companies are willing to invest today, for the big revenue numbers come from those companies who have already made the plunge.

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