Hearst TV president says some TV dollars ‘will never come back’

David Barrett, president of Hearst Television, told the FCC last week that new competition among sources of news content is permanent, and is having a “profound effect” on where advertising dollars and television viewers are moving.

Although some of the current economic hit being taken by broadcasters is cyclical, Hearst noted that much of it is systematic and rooted in permanent changes that will not be undone by an economic recovery.

Speaking at an FCC workshop on the commission’s upcoming review of media ownership rules, Barrett cited as an example the Boston TV market. From 2003-2004, aggregate revenues were in excess of $500 million, he said. By 2008-2009, that figure was down to $300 million.

“That drop is driven by big changes in how ad dollars are being allocated in the marketplace,” Barrett said. “Money in this industry follows the audience, and the audience has gone to different and scattered places.”

The Hearst president said that a cable operator serving 85 percent of the Boston market could own one of the top TV stations as well, while two of the top four stations in a market were prevented from being co-owned by broadcasters. Such a situation is not in the public interest, he argued.

George Mahoney, vice president and general counsel for Media General, said broadcasters are not likely to see a significant return of advertising revenue from automakers. Car commercials have traditionally been economic drivers of local news. Ditto for real estate advertising, another traditionally solid income source for broadcasters, he said. Today there’s also increased competition for real estate advertising on the Internet.

The FCC, Mahoney said, has to look at the reality of the marketplace, which is that Google is taking ad dollars out of markets large and small by “scraping” a lot of local news sources and putting local ads next to them.

“There are real threats to the vitality of local media platforms in small markets,” he said, and the FCC ought to be very concerned when it sees stations going dark or dropping news in the kind of small and mid-sized markets where Media General has stations. It is a real issue.”

James Winston, speaking for the National Association of Black Owned Broadcasters, argued that the FCC should not change its ownership rules. The commission has drawn reasonable line and has a waiver policy in place, Winston said. Broadcasters’ troubles, he said, are primarily cyclical and there will be a further wave of consolidation when the economy rebounds.