How would you characterize the state of local TV (i.e., healthy, struggling, etc.)? Why?
Generally healthy, with positive advertising growth, strong increases in retransmission consent revenue, potential in online advertising sales, and the future with ATSC 3.0, which is a is a new transmission standard that will allow local television stations to offer better quality, mobile reception, more multicasting opportunities, and new business models, all of which will strengthen the overall revenue potential.
What’s the most important thing for media buyers and planners to know about local TV in 2017?
While 2017 will be a “down” year due to the lack of significant political advertising, it will still be a solid year.
Many advertisers, both national and local, still utilize local television stations as part of their advertising mix. Local television station advertising still works.
Did political hit the heights you expected for local TV this year? Why or why not?
No, political will be less than what some had anticipated, though in some markets where there are strong senatorial and/or gubernatorial races (e.g., Indiana), there will be amounts that exceed the expected amounts.
Why not — is that a one-year anomaly, or do you expect there to be similar patterns in the future?
While we expect other local media to continue to see strong gains in political advertising (thus reducing the share going to local television stations), we believe local television stations will continue to be an important part of the political advertising spending.
The report states, “Television is better positioned than other traditional media to deal with this shift in consumer habits and device usage.” Why is that?
Video advertising is an incredibly important part of the advertising mix, and local television stations still reach a mass local audience; these stations are also offering online video reach through their online sites and will be able to further expand their offerings in the future through ATSC 3.0
What sort of dollars are TV stations seeing from digital advertising, and what growth potential is there?
We estimate that in 2016, local television stations generated nearly $1.3 billion in gross online advertising, and we expect near double-digit increases over the next few years
How does retrans money compare to advertising money for local stations? Why has it grown so quickly?
Gross advertising revenue by local television station I show three times the size of retransmission consent revenue, though retransmission consent revenue is increasing at a much faster rate due to successful negotiations with the cable MSOs and the satellite distribution companies.
How does cord cutting affect local TV owners’ bargaining position?
Cord cutting by consumers will enhance the bargaining position of local broadcast stations; without access to these households, cable-only networks will suffer from lower subscription and advertising revenue and local television stations will benefit in increased audiences.
Does this report take into account the potential impact of the FCC spectrum auction? What sort of impact do you see that having
Yes, it does. After the auction is over, there will be fewer local television stations and the remaining ones will be stronger. Those broadcast groups who were successful in the auction will have a more secure financial foundation.
Do you have any sense how many fewer stations there will be? Also, are underperforming stations the ones expected to be out?
The number of fewer stations will ultimately be determined by the total amount of spectrum that is reclaimed. It could be somewhere between 200-350 stations.
As for who is no longer operating, of course many of the underperforming stations will no longer be on the air. However, there will be some successful stations that do some channel sharing. While they will not occupy as much of the spectrum, they will still be around
