08.24.2009 04:15 PM
SNL Kagan Projects TV Station ad Revenue Growth in 2010
The latest TV station revenue study from SNL Kagan suggests 2010 will be a
better year for the industry. Kagan’s “TV Station Deals & Finance,” says ad
revenues at TV stations could reach $18.5 billion next year, after declining by
2.5 percent in 2008 and a further 17 percent in 2009. SNL Kagan analysts said a
mild recovery in ad markets, plus even-year political and Olympic spend, will
drive the positive momentum.
Retransmission consent revenues reached $500.1 million in 2008, Kagan said, and
are projected to grow to $738.7 million in 2009, crossing the billion-dollar
threshold by 2011. SNL Kagan also estimated that online revenues generated by
TV station operators will surpass $1 billion by 2012.
“Non-traditional revenues have helped to offset some of the revenue softness
resulting from the economic downturn,” said SNL Kagan analyst Robin Flynn. “In
particular, retransmission fee revenue has proven to be a high growth, high
margin revenue stream for TV station owners. We’ve seen broadcasters
successfully conclude retrans agreements with multichannel providers over the past
several years, which should lead to continued growth for this revenue segment.”
The latest SNL Kagan study also examined TV station deals. The TV deal market
in 2008 plummeted to lows not seen in decades. The average deal price for 2008
reached an 18-year low of $12.9 million and cash flow multiples fell to 8x in
the fourth quarter--a benchmark not seen since 1991. Through the first half of
2009, 114 stations sold for $550.1 million or 9.3x cash flow, but the majority
were senior lender takeovers in debt-for-equity swaps.
“Although the deal market has been very quiet in 2008-09 thanks to lack of
finance and a slow advertising market, things could begin to improve in 2010 as
a pent-up supply of stations comes to market. Leading TV station properties in
attractive markets continue to be highly sought-after assets,” Flynn said.