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SNL Kagan: Station Revenues Down $5.5 Billion From 2006-09

But report says rosy retrans forecast will give stations boost

By John Eggerton -- Broadcasting & Cable, 2/7/2010 10:12:00 AM

Between 2006 and 2009, TV station revenues were down over five and a half billion dollars, according to a new report from SNL Kagan, from $24.6 billion to under $19 billion.

By 2013, Kagan predicts TV station revenues will only have recovered about half of that drop, to $21.7 billion. "While still below 2006 levels," says the report, "our analysis indicates an industry with positive momentum."

That's in part because the good news is that Kagan predicts the increase in retrans and online revenue, while still only a relatively small fraction of the total pie, will lead to a healthier future.

It is also because the report estimates a 5-7% boost in ad spending this year, which Kagan calls conservative and adds could increase if auto comes back and political "delivers on some early promise." A Supreme Court decision allowing direct funding of campaign ads by corporations and unions could help boost the latter, unless it is undone by unhappy legislators and the Obama administration.

According to its predictions, retrans revenues are expected to increase from just one percent of the total in 2006 to 9% in 2013, with online increasing from 2% to 7%.

Continuing the rosy retrans outlook, the report says networks should benefit from O&O retrans plus a potential share of higher affiliate fees--networks are increasingly talking about getting a cut of broadcasters increases in retrans, arguing their prime time is a big driver of station value.

Kagan says the networks would turn around and invest more in scripted dramas, which help with news lead-ins (as opposed to Jay Leno at 10, the report suggests), and to more investment in sports rights, which are huge ratings winners.

That last may be a bit of wishful thinking given the migration of a lot of sports from network to cable--college bowl games, golf, Monday Night Football, All-Star games, Nascar.

Other advertisers looking to drive buzz on top of their ads may need to work a bit harder to navigate around the controversial content.
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