• by David Goetzl  @dgoetzl, January 2, 2009

By any measure, 2008 was a challenging year for the local broadcast business. Even with the popular Beijing Games and the Obama campaign's record spending, industry revenues look to be significantly down compared to 2007.

What's in store for 2009? Barclays Capital says tough times, forecasting a 15.5% decline for spot sales. Far worse, the firm projects an additional drop of 1.1% in 2010--stations usually do well in "even" years, thanks to Olympic and political dollars.

Chris Rohrs, the president of the Television Bureau of Advertising, the trade group for local broadcasters, said of 2008 tongue-in-cheek: "Let's hope we don't look back on it as the good old days." Despite forecasts, Rohrs is optimistic that the business has a robust future.

As 2009 dawns, he spoke with MediaPost about a variety of topics, ranging from weathering a recession to HDTV's potential for increasing viewership to TVB's growing e-business initiative. Here's an overview of his remarks:

MediaPost: How did local TV fare in 2008?

Rohrs: Unexpectedly bad. We thought we'd be up 7% or thereabouts because of both the Olympics and political activity. It was an "even-numbered" year, and we expected to be pretty solid. When the smoke clears, I think we will be down close to 7%. And obviously, the culprit was an economic meltdown, which we're still swimming through. We certainly did not foresee this kind of lockdown in the consumer economy.

Notably, our lead category--automotive--was down about 15% through the first nine months of the year. We are largely a pure reflection of the marketplace economy--supply and demand--and when the consumer closes it down, it affects our advertisers very directly. That's where we are as we turn into 2009.

MediaPost: David Barrett, CEO of the Hearst-Argyle group, said business is as bad as he can remember, then quipped: "And I'm getting old?" Do you feel similarly?

Rohrs: This is unprecedented. None of us has ever seen this before in our lifetimes, and I'm not talking about just our business. This is absolutely uncharted territory.

MediaPost: Some believe a marketer makes a mistake by pulling back on ad spending in a recession. Do you agree?

Rohrs: The consumer is absolutely going to need to be motivated and incentivized to reengage. Advertising and marketing are going to be very important to talk to the consumer--to put forth value messaging, talk about products, quality, etc.

MediaPost: Any insight as to when the recession will end?

Rohrs: We have a presentation that we're using with advertisers and also providing to our members that speaks to when this thing may end. We try to put it in the context of the previous recessions. The answer sort of comes down to which type of recession do you think this is. Is it a V-shaped one, where you go down sharply and hard, but then come back up pretty quickly? Or is it U-shaped, where you go down and stay across the bottom for an extended period and then come back up?

We don't have the answer as to when this one will end. What we do say thus far is there's very little evidence for a first-half '09 recovery. It is my expectation that we'll see some beginning signs of recovery in the second half of '09 and get more of a real recovery in 2010.

MediaPost: A factor in a quick recovery comes when--and if--General Motors, Ford and Chrysler begin spending again at traditional levels. Toyota is also strapped. What's the impact?

Rohrs: That's a big trouble spot. People were startled when the sales results for the last two months came in and the Asian manufacturers were as bad off as the Detroit Three. Their sales plunged pretty much to the same extent that the domestics did--down 25%-30%. The sense had been that they were sort of immune to that kind of plunge.

Auto is a real problem for every advertising-supported medium. Certainly for us, we're the No. 1 destination for automotive ad dollars--spot TV--so we take it on the chin more than anybody.

MediaPost: Can strict broadcasters with essentially a single-stream revenue model prosper in the future?

Rohrs: Pure-play models are clearly at a disadvantage to dual-stream models. No one in their right mind would deny that. We are going to need to continue to find ways to create additional streams, whether it's [retrans consent dollars] or it's through some of the digital opportunities. The reason I say the model endures and thrives is because the American consumer continues to embrace video and television. Use of the product is not shrinking.

In fact, Nielsen recently reported a strong uptick in the third quarter where use of the medium was up 4%. The average monthly time spent by a person watching TV in the home was 142 hours a month. Using the Internet, for instance, was 27 hours a month. Television has a tremendous power of sight, sound and motion.

But add to that the tremendous appeal of high-definition television, which continues to fuel satisfaction with this medium. It's off the charts, an extraordinary home run for the consumer.

MediaPost: Do you anticipate the digital transition in February leading to a significant number of homes without reception, which could hurt ratings in the short term?

Rohrs: I do. I think it's going to be bumpy. Some 5% or 6% are said to be completely unready; others are partially unready. There is going to be some breakage. It's going to be bumpy for a month or two.

MediaPost: Certainly with the auto category struggling, stations have made efforts to break into new categories, whether it's law firms or other first-time advertisers. Have they been successful enough to help offset lost revenue, or has it really just been filling some unsold avails?

Rohrs: Here's the problem--I keep coming back to automotive. That's such a huge piece of the equation, and when that drops, there's nothing you can do to replace it. All you can do is chip away at it. The whole health and medical category is a very good example--hospital advertising, doctor and dentist practices, even prescription drugs. That's a good growth category and sort of recession-proof to a degree, so stations have been working very hard on that.

There's a tremendous emphasis on local development. The local sales staffs are going out and doing business with the smaller local businesses, as opposed to the national advertisers out of New York and Chicago and places like that. But when your No. 1, huge 800-pound gorilla category is rocked, it's mighty hard to make that up.

MediaPost: A possible growth area is with multicast channels and other digital opportunities such as affiliated Web sites. Will that help withstand some of the audience erosion from the primary, linear TV stations?

Rohrs: Therein lies one of the $64,000 questions. I don't know the answer, but I think we're going to get a lot closer to it because of the economic difficulties. We've left behind the fat, happy days when there was a growing pie, plenty of disposable income and marketers could kind of do whatever they wanted.

MediaPost: So you are looking at Internet possibilities?

The Internet? Sure. Banner ads? This is tremendous. Search, keywords, why not?

Whatever you do absolutely, 100% has to work. You can't have any parts of your plan ineffective anymore or you're risking everything. The whole movement toward Internet-based advertising--and this whole premise that it's all going that way--in 2009 and into 2010, we're going to have a chance to say, 'Really let's see.'

We've been big proponents of Web sites, advocates for mobile. We're trying to figure out if there is a play for us in user-generated content, a local play for social media. Internet advertising is being subjected to very tough questions, the same type of questions that have grown up around traditional media--the same standards and expectations. Is that good or bad for us? Does that clip the opportunity to broaden our revenue streams in this multi-platform area? Perhaps.

Is there a good side for TV? Maybe. The good side is a move back toward so-called traditional, proven media like television.

MediaPost: Broadcasters have banded together to develop a standard platform to deliver over-the-air digital TV to mobile devices. There recently were two successful trials. Is that something the industry is pointing toward?

Rohrs: It's very encouraging. But this is not a 2009 item. There is not going to be any revenue of any significance for us in mobile in 2009. First, the standard is only expected to be defined sometime during '09. And we're going to need a new generation of handsets with the chips to receive this direct transmission. Then we need to successfully define the content and ad formats for this little screen. My gut says there's a big, big business there, but you're really talking about 2010, '11, '12.

MediaPost: The TVB ePort system aims to allow buyers and sellers to conduct an entire transaction electronically. Can you offer details about its rollout so far? Are buyers and sellers doing more than sending and receiving orders via ePort? Can they go back and forth and make changes to buys without a fax machine or phone?

Rohrs: We're still at the order stage. We're building usage, but more than 95% of the transactions are original orders so far. We have just crossed the threshold of $150 million in transactions. That's a good number, and it's growing. More than 700 local stations have gotten orders through ePort--a nice starting number.

2009 is going to be a pivotal year for ePort. It will tell the tale of whether the promise will be met. We took the position that if we build it, they will come. We've built it, and this is the year to see if there's usage. The whole magic of this thing is change management. The real hernia in the spot television business is the huge amount of change that goes on in selling--with preemptions, schedule changes, changes in the order by the buyer or seller.

The motivation for taking the lead in e-business was to improve change management to make it electronic. You took costs out, and you improved the accuracy and reliability and made it more user-friendly.

The full functionality of this platform is built and ready. It can handle everything from proposal to invoice. So far, we have been using it largely for original orders. In 2009, it's very important that we get to full-functionality usage, so that change management happens electronically.

MediaPost: What are TVB's principal goals for 2009?

Rohrs: ePort will continue to be one of our primary goals; electronic processing is crucial. In fact, it's much more so when you think about our customer base--the ad agencies. They're under greater financial stress than they have ever been.

We need to make our medium cost-efficient and user-friendly. E-business is not something you put on the side during a recession. It's something that you accelerate. So that will continue to be a big part of our mission, especially since this is the pivotal year for it. Second, our members are in need of support and services more than ever--the whole package of data and information and idea power that we provide through our Web site and Webcasts and conferences.

We're trying to answer the call by lifting the level of our services--to be as active in calling directly on advertisers and advocating for television.