As print and digital newsrooms struggle, local broadcast stations are making money ‘hand over fist’

December 11, 2019
Category: Business & Work

As legacy print outlets and many digital startups struggle financially, another segment of the news industry is doing just fine, thanks.

Local broadcast, building on an already solid advertising and audience base, remains the most popular medium for political advertising. 2018 outpaced the last presidential cycle in 2016, and 2019-20 figures to be much better still.

That’s the picture I gleaned from recent financial reports from the biggest companies and several consulting firms that offer industry projections.

A Sinclair Broadcast Group executive put it this way in an earnings conference call earlier this year: “In 2020 we are not going to be able to get out of the way of the money. It’s literally going to be hand over fist.”

And that was before Mike Bloomberg kicked off his Democratic primary bid, running $30 million worth of ads in a single week.

From the viewpoint of print/digital journalists living with anxiety over layoffs and publishers trying to orchestrate new revenue streams, the advantaged local broadcast sector has two more noteworthy features.

Digital placements are gaining market share each election cycle, but the overall increases in what’s spent ensure local broadcast revenues keep growing nonetheless. Local TV stands to get nearly half of a total $6 billion spend for the cycle, according to consultants BIA and Kantar.

Even in the comparatively weaker odd-numbered years, local TV can tap into a reliable source of revenue growth: the fees cable networks pay to carry their programs. The trend in those fees has been reliably upward. As the big companies continue to acquire more stations, they have more bargaining power. Multi-year carriage contracts come due every year and reliably renew at a much higher level.

To newspaper executives of a certain age, this may sound like the good-old-days business model, where newspapers could raise ad rates every year because they were virtually the only game in town to penetrate the broadest audience in the market.

I have been curious whether the big local broadcast companies are applying this bounty to putting more resources into journalism. The answer is equivocal. Total journalists employed, according to the Bureau of Labor Statistics and the Radio and Television News Directors Association, have held steady at 27,000 to 29,000 for roughly a decade. That is not exactly expansion but a distinct contrast to the sharply declining news staff numbers at newspapers and magazines.

Beyond the raw numbers, every election cycle has its own dynamic. I spoke to two veteran forecasters — Steve Passwaiter of Kantar and Mark Fratrik of BIA — and gleaned these features of the 2020 presidential race:

  • The run-up to the first primaries in January and February has so far been a time of moderate spending — except for Tom Steyer, who led the rest of the field by a wide margin (even not counting his separate Need to Impeach PAC). Now Bloomberg has pulled even and will soon leap ahead.
  • Twists in the primary calendar will bring some states into play that typically have not been, notably California and Texas. Both get little spending in the general election because they are safe for one party or the other, but as Super Tuesday primaries, they will deliver many delegates to both parties’ nominating conventions.

Bloomberg, skipping the early primaries, is already making big buys in California. And he is saturating available ad slots in news programming in Virginia and my home state of Florida.

  • For the general election, once the Trump/Republican war chest kicks in, the map of highly contested swing states will change from its 2016 version. Arizona and Nevada are moving into play; Ohio is now considered safely Republican except in the event of a runaway.

Advertising Analytics and Cross Section Media earlier this year offered this projected ranking among states in total presidential ad spending (primary and general):

  1.  Florida — $339 million.
  2.  Pennsylvania — $288 million.
  3.  Arizona — $141 million.
  4.  Nevada — $130 million.
  5.  North Carolina — $122 million.
  6.  Michigan — $121 million.
  7.  Wisconsin — $67 million.
  8.  New Hampshire — $63 million.
  9.  Colorado — $55 million.
  10. Georgia — $53 million.

The forecasts I have been citing date from September or earlier. The consulting companies sell more detailed slices of the data to clients, BIA’s Fratick said, so only occasionally update the big picture projections. Even without a late entrant like Bloomberg, he added, “We would probably be revising it upward” after the first primaries.

The growth of digital vs. traditional media has been in progress for some time. Digital share in 2019-2020 is expected to be $1.6 billion. The majority of that goes to Google and Facebook. “Targeting is of as much interest to Elizabeth Warren as it is to Unilever,” Passwaiter said.

Another good share of the projected spending  — about $1 billion — will go to direct placements on cable systems (as opposed to the local broadcast feeds they carry). Radio gets a little; newspapers almost none.

No wonder the broadcast arms of Gannett (now TEGNA), E.W. Scripps, and Tribune (now part of Nexstar) got divorced from newspaper divisions earlier this decade. However good their journalism, in revenues and profits, they were not nearly equal contributors to the marriage.

Rick Edmonds is Poynter’s media business analyst. He can be reached at redmonds@poynter.org.