GE Capital Report Offers Good And Bad News For TV Stations
Sees new revenue streams growing long term
By Claire Atkinson -- Broadcasting & Cable, 12/19/2008 8:17:00 AM
GE Capital delivered some rare positive news for local media today with a report on the health of the TV station business. The General Electric company pointed out a handful of reasons why the business has good long term prospects despite the current ad crunch.
The report states that the TV station industry is seeing "new revenue streams from retransmission fees, digital multicasting and the Internet, with mobile revenue on the horizon." Better picture quality and the shift to multicasting will improve business models, says the report adding, that TV stations have responded to the threat of time shifting, increased viewing choice and competition for ad dollars by emphasizing their local news and sports content and making content available via streaming video.
However, the report didn't mince words about the state of the challenging ad environment. According to its numbers auto advertising in the sector is down 17% while retail is down 15-20%, even as political dollars gave 2008 coffers a big boost. Still, GE Capital sees TV stations holding increased importance in future elections given the strong local reach.
"We continue to forecast moderate revenue growth over time bringing the industry to $21.7 billion by 2018," reads the report. TV station ad revenue is expected to drop 6.9% in 2008. The company's outlook for 2009 is for an 11.2% decline. "Retransmission fees and Internet revenue should buffer the fall and become growth vehicles for 2010, a projected 5.4% up year." Retransmission fees were 32% in the first nine months of 2008 to $124 million while online revenue is expected to reach $1.1 billion in 2008.
Robert Raciti, senior vice president and industry strategist at GE Capital's Media, Communications and Entertainment business, added: "People are underestimating the value of broadcast TV." He points to Japan where consumers watch local TV in a corner of their computer screens and on mobile phones. "People are missing the end game. It's not about one distribution channel. The more ways you can connect the better."
"Right now traditional companies are crossing the chasm and the challenge is to use online to enhance the overall experience. They are well equipped to take advantage and they have strong brands, the eyeballs and the relationships and they're making the investments."
GE Capital is part of General Electric which owns stations through NBC Universal.
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