Although political advertising so far for local TV stations has come in mostly as expected, there are concerns -- especially in tandem with where core (non political) advertising has been for major operators.
Looking at a couple of the biggest TV stations owners might offer some perspective.
Nexstar Media Group, the biggest owner of U.S. local TV stations, soared 16% in the third quarter to $154 million in political advertising one the same period in 2020 -- with the company growing 22% in overall ad revenue to $622 million.
For that $154 million, the company lost $22 million year-over-year in core TV advertising due to market softness as well as “political displacement.”
FCC rules mandate that TV stations must run political advertisers' campaigns that can push out core, non-political marketers.
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For its part, Sinclair, the second-biggest U.S. owner of TV stations, rose 42% to $433 million in overall ad revenue, with $140 million coming from political advertising.
Although political advertising can mess up its regular seasonal advertiser media scheduling, Sinclair said core advertising inched up 1%.
For the fourth quarter, Sinclair says core advertising will be down mid-single digits. But that’s not too bad, says Daniel Kurnos, media analyst at Benchmark. “Political numbers like this would normally produce anywhere from 6% to 15% declines per quarter in core revenue due to crowd-out.”
He adds that Sinclair can do this because it has a “new algorithmic yield management strategy" that "is still working.”
All this suggests that local TV stations still believe that political advertising will continue on this pace -- if not increase -- in future years. Are hungry local and regional market political groups -- and the expected big Presidential media years (as well as midterms election years) -- still trending higher?
Some political advertising shadows may be lurking around.
The broader picture may suggest a cloudier side to political advertising, especially when looking at Nexstar -- which for the year so far in 2024 through Election Day, pulled in $491 million.
The problem is that this was a big $100 million below consensus, says Kurnos.
Sinclair came in at $406 million for the year, down around $30 million, an expected $440 million.
And perhaps the concerns are not just for Nexstar and Sinclair, but for all media platforms looking to make hay with political.
“It feels like total political may come in below lofty expectations across every medium this campaign cycle, with last minute cancellations or dollar shifts particularly damaging to broadcasters who typically require longer lead times to fill inventory," Kurnos adds.
Core advertisers have already been an issue with local TV stations, and adding in political messaging uncertainty is not good news.