Political bucks will drive a boost in TV station revenues in 2006, according to BIA Financial Network analysts.
BIA Financial predicts 2006 TV market revues will be up more than 7% to a total $22.2 billion. That is versus a drop of more than 7% last year to $20.7 billion, again partly because of the drop in election ads form the presidential year of 2004.
The 2006 increase is expected to be primarily driven by states with competitive Senate and governor races, a pattern BIA has picked up over the last several years.
Fox is the leading moneymaker among network TV groups, raking in $2.3 billion in 2005, according to BIA, followed by CBS, NBC, Tribune, then ABC.
Mark Fratrik, a VP with BIA Financial, said local TV fortunes increasingly hinge on political spending. "Whereas the market used to be able to count on automotive advertisers increasing advertising expenditures every year, in some cases we’re seeing those additional dollars moving to other, more contemporary mediums and television broadcasters having to rely on political advertising in even-numbered years for any meaningful annual revenue growth," he said in a statement releasing the prognostications.
Fratrick does not see a big swing in the cycle, however: "With the overall economy growing at a consistent pace, television revenues will not decrease dramatically in 2007, and should continue to increase strongly through the 2008 elections.”
BIA says that new revenue streams, like delivering content to cellphones or even starting to demand retransmission consent money from cable, represent relatively few dollars at the moment but expects those streams to swell, and suggests local TV needs to capitalize on them. "In certain circumstances," says Fratrik, "a smaller broadcaster may be able to generate up to 25% of their revenue and 40% of their cash flow from these new applications." The study does not deal with it, but stations in the Washington area have benefitted mightily from another type of political campaign--the fight between telcos and cable over franchise reform legislation. That fight has translated to millions in windfall ad dollars, according to some estimates.