• by David Goetzl  @dgoetzl, April 7, 2008

Station groups hoping digital extensions will serve as a buffer--or better--against slowing growth rates in their traditional businesses may have a while to wait, according to a new analyst's report.

While TV broadcast groups ramp up investment in their station Web sites and anticipate expansion in the mobile space and the addition of multicast channels, successful "revenue/profit models" have not been established, according to Wachovia's Marci Ryvicker. A lack of "consensus" there, she wrote, "leads us to believe that we are at least five (if not 10) years away before new media/digital opportunities have any financial significance in the broadcast space."

The weak short-term prospects also apply to radio operators and HD radio. While the upgrade has been touted for years, she wrote, it is "amazing to us" that "it is still not in cars ... radio groups still plan to use the spectrum for programming rather than datacasting or on-demand alternatives ... and no one can figure out what the revenue model will be."

Ryvicker's report was based, in part, on takeaways from an industry event last week organized by SNL/Kagan, in which she served as a panelist.

Her report suggested that M&A activity with local TV stations could pick up once the "debt markets recover, although no one knows the magnitude of activity." Stations went for a premium in early 2007 before the credit meltdown--which then forced several groups to pull their assets off the market. Despite the current climate, NBC Universal recently announced it would sell its Hartford and Miami stations.

While questions remain about how TV broadcasters can monetize multicast opportunities, Ryvicker wrote that only Gray Television--which serves 30 smaller markets and operates 39 multicast channels including seven local news and weather outlets--is ahead of the curve.

Also on radio, Ryvicker noted that smaller, private radio companies are having success (some up double-digits this year) due to a "hyper-focus on maintaining and creating local relationships" and the ability to manage their business without having to show improvement to Wall Street every quarter.

Many TV broadcasters are similarly trying to shift to more local targeting as a differentiator, with one driver being an apparent weakness in the national spot business.