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Olympics Rings, Politicians'Slings, Automotive Bling - Broadcasting & Cable

Olympics Rings, Politicians'Slings, Automotive Bling

What largesse the new year brings! What could possibly go wrong?
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Even the glass-quarter-full crowd would have to concede: 2012 represents a pretty darn good time to be in the local television business. The three biggest factors in how the year plays out for stations are, of course, political advertising, more political advertising, and then even more political advertising. It’s all you can eat, followed by dessert and a rare digestif -- with the pols picking up the tab.

Pol Position

The most recent figure from Kantar Media’s Campaign Media Analysis Group (CMAG), the reigning expert on forecasting political advertising expenditures, sees $2.5 billion to $3.2 billion in political in spot TV this year. And if we’ve learned anything from political spending forecasts that come a year or so in advance of Election Day, it’s that they’re often too modest. Even the low end of CMAG’s range would represent record candidate cash for stations, thanks in large part to the Citizens United ruling opening the taps on unprecedented spending, and the win-at-allcosts wars between the political parties.

Such largesse ushers in its own problem, albeit a high-class one: The challenge of keeping regular advertisers—the local car dealer, the regional restaurant chain—happy when political spots hog inventory. TVB president Steve Lanzano was in Detroit in early December, speaking with the auto giants about, among other things, how dealers can avoid getting squeezed out next October, such as buying spots in non-battleground states, and securing inventory early.

Long after those free-spending politicians have cleared out of stations’ airwaves, Bob Smith Chevy will still be looking to move Impalas and Silverados. “Those advertisers are with us the other 11 months out of the year,” Lanzano says. “Make sure you take care of them.”

Autos on Good Path

Speaking of automotive, that sector looks favorable for stations as well after a 2011 that featured some unforeseen potholes. Honda and Toyota, after production setbacks stemming from Japan’s horrific tsunami last March, are fully operational. Overall sales were hot in the autumn and are expected to carry the momentum into 2012: Lanzano says a forecasted 13.6-13.8 million auto sales in 2012 could best 2011 by a cool million.

The calculus, for stations, is simple. “The more cars sold, the more money that goes to local broadcasters,” says Lanzano.

Relative Retrans Calm

So it’s downright rosy, right? Well… it pretty much looks that way. The past year was besmirched by nasty squabbles over retransmission consent spoils between stations and their partner networks. Several outlets, including former Fox affiliates KTRV Boise, WTVW Evansville and KSFX Springfield (Mo.), severed long-lucrative relationships. That situation has stabilized, with stations conceding the point on reverse comp. Nexstar, the biggest disruptor in the station group space, has inked affiliation agreement extensions for its eight remaining Fox stations, indicating détente between the group and the network has been reached.

NBC’s tricky proxy arrangement is, according to multiple players involved in the deal, close to being fi nalized, so the network may commence negotiating retransmission consent deals on behalf of its affiliates while the Rockefeller Center ice rink is still frozen. Nexstar chief Perry Sook, addressing a roomful of investors in New York last month, wouldn’t mind seeing the other networks follow suit. “If the networks can come together [with their affiliates], I think we might get [to $2 per subscriber] faster,” Sook said.

What Else Is in Store for 2012

The past year was all about social media, with every station fighting for bragging rights as to who has the most Facebook fans (even if they are not exactly sure how to turn that into revenue), and news professionals scanning their Twitter feeds like it’s the greatest newswire ever. Stations will continue to fi ne-tune those strategies in 2012.

Local television leaders will also fine-tune the delivery of local content to smartphones and tablets, as consumption habits change with each passing day and younger generations find less and less need for the big, old TV in the corner. Broadcast execs at least have a little time to figure out the winning formula.

“There are larger consumer trends people have to be mindful of, such as increasing consumption levels of content on mobile and social media platforms,” says Bill Hague, senior VP at media consultancy Frank N. Magid. “Will any of them hit critical mass in 2012? I don’t think so, but it’s just a matter of time. That’s why every legacy media executive needs to have a watchful eye on all platforms.”

Acquisitions are expected to be quiet. Stations finally saw robust acquisitions in 2011, though Sinclair Broadcast Group, with its deals to acquire Four Points and Freedom Broadcasting slated to close in the coming weeks, may have cleared out much of the available M&A for 2012. Nexstar officially continues to “explore and evaluate strategic alternatives,” while a number of other groups might be offering up black books on the sly. But the year looks quiet for station deals.

So what could possibly go wrong in 2012? No one knows, and that’s the scary thing. No one saw the BP oil spill coming in 2010, or the tsunami in 2011. Such acts are daggers through the heart of a sensitive economy, and their frightful images on CNN and Fox News shatter consumer confi dence.

Nonetheless, station executives feel pretty good. “Broadcasters are coolly confident,” says Lanzano. “Election, Olympics, and primetime broadcast up for the first time in 11 years [on the Big Four nets among viewers 18-49]. That would be a real good trend.”

E-mail comments to mmalone@nbmedia.com and follow him on Twitter: @BCMikeMalone

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