Weak NBC Ratings, Auto Sales Drive Hearst-Argyle Ad Revenue Down In Q2

Hampered by a slowdown in the auto category and low ratings at the NBC network, second-quarter advertising revenue fell for the Hearst-Argyle station group--if political spending is stripped out.

Revenue for national and local television sales fell 4.6 percent to $161.9 million. In this Congressional-election year, if political spending is added in, ad revenues will have increased 1.6 percent to $174.8 million.

Hearst-Argyle saw an 11 percent decline for the quarter in the auto category, which accounted for 27 percent of ad revenues. "That's a tough hurdle to overcome," said President-CEO David Barrett, who suggested things would improve with General Motors boosting spending over the remainder of the year.

Barrett spoke on a conference call with analysts to announce the second-quarter results.

Also contributing to the slowdown, he said, were weak prime-time ratings at the NBC network, which hurt local sales at some of the company's ten NBC affiliates (it's the second-largest NBC affiliate group).



In other categories, Barrett said package goods and pharmaceuticals decreased, along with movies--although this was the result of a sharp drop at just one of Hearst-Argyle's stations.

The retail, financial services, and telecommunications categories saw increases, Barrett said.

One bright spot was a significant jump in digital revenues--a major point of emphasis for the company as it looks for new revenue streams amid an industry slowdown for local television sales. Digital revenues increased from $85,000 a year ago to $3.4 million this year.

Earlier this month, Hearst-Argyle announced that Eric Koepele, formerly of CNET, joined the company as director of digital media sales. Barrett said the company would look to invest more in its digital businesses, including in the hiring of "more talented salespeople."

Thanks in large part to a new carriage deal with EchoStar in which it negotiated along with cable network Lifetime (50 percent owned by parent Hearst Corp.), retransmission-consent revenue grew 230 percent to $8.6 million for the first half of 2006.

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