Local TV Ad Revenue Continues To Slip, While Retransmission Revenue Grows

Local TV stations' core advertising will continue to see soft results. Over the next 12 to 18 months, a decline of 3% is forecast, according to Moody's Investors Service.

Moody's says local TV ad budgets will continue to suffer from advertising going to big digital media players including Google and Facebook as well as big TV advertising categories such as automotive -- with less spending on local TV.

Core TV advertising excludes special events such as big political advertising and Olympic seasons, which occur every two years.

Other forecasts project total local linear TV station advertising will total around $19 billion this year.

Moody's also projects that local TV stations' own digital TV advertising efforts, while growing, will remain small -- representing less than 10% of its total live, linear TV advertising take.



On the positive side, local TV stations will continue to see increasing revenues from retransmission fees from pay TV providers -- rising to a 40% average of their total revenue and 41% in 2020.

Retransmission fees collected by local TV station groups are shared with their respective networks -- Fox, CBS, ABC, NBC, and CW, for example. The report adds that these shares to the networks -- called "reverse retransmission" fees by some -- are growing and currently amount to 50% this year, expected to rise to 55% in 2020.

Near-term, from all their revenue-generating efforts, TV stations will continue to see "stable" cash flow (EBITDA) results (earnings before interest, taxes, depreciation, and amortization) -- rising 3% over the next year to year-and-a-half.

1 comment about "Local TV Ad Revenue Continues To Slip, While Retransmission Revenue Grows".
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  1. Ed Papazian from Media Dynamics Inc, October 23, 2019 at 10:15 a.m.

    Very true. We have just completed our own analysis of the incomes, costs and gross profits for the broadcast TV networks, TV stations and cable channels which shows the huge importance of re-transmission fees as well as digital ad sales and other sources of income in contrast to traditional "linear TV" ad revenues. As our report in the upcoming edition of "TV Dimensions 2020" will reveal, without these alternative sources of revenue, none of the three types of TV programmers would be viable operations. Instead, thanks to "non-linear" ad revenues they are scoring significant pre-tax profits, although the stations as a group are lagging behind and need to step up their digital activities as well as being far more pro-active in marketing their "linear TV" advertising plusses.

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