A record $3.4 billion in TV political advertising will power broadcast stations to a 14-18% boost in advertising revenues in 2016, according to a new report by Moody’s Investors Service.
The broadcast groups that stand to benefit the most are E.W. Scripps and Gray Television, according to Moody’s, followed by Tegna, Sinclair Broadcast Group, Tribune Media and Nexstar/Media General.
Moody’s expects non-political core advertising to grow at a 0-2% rating through mid-2017. This is the best indicator of the broadcast industry’s health and reflects stable consumer sentiment and U.S. economic growth.
A big driver of broadcast revenue will be retransmission consent payments. Moody’s projects that revenue for the broadcasters it follows will grow by more than 15% through late 2017. But higher reverse-compensation payments to the networks will narrow broadcasters margins.
“A handful of technological and demographic developments point to emerging revenue opportunities for advertisers in coming years,” Moody’s says. “Demand for automated advertising both nationally and locally is leading certain broadcasters to enhance their programmatic advertising capabilities. A next-generation broadcast platform, ATSC 3.0, promises new revenue streams with universal and Internet-based transmission.”