Kagan Predicts Decline in ’09

Turnaround expected in 2010
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MONTEREY, CALIF.: Broadcast revenues will continue to track down this year, but will regain some ground over the longer term, SNL Kagan’s analysts say. Kagan’s updated “Radio/TV Station Annual Outlook” anticipates a 2009 decline of nearly 16 percent for combined TV station spot ad revenues. Last year, local and national spot dropped nearly 7 percent to $20.1 billion, the report said.

Kagan predicted a turnaround in 2010, “with modest growth through 2013 offsetting some of the declines of 2008-09.” Over the five-year period, researchers said

In the five-year outlook, SNL Kagan expects the compound annual growth rate for TV revenues to inch down by 2 percent.

Michigan markets, with their dependence on the failing auto industry, are expected to register the slowest recovery. TV revenues for stations in Detroit, the 11th largest television market in the country at last count, are expected to dip nearly 18 percent this year. The five-year CAGR for Detroit is pegged to slide 4.4 percent.

Stations in Washington, D.C., designated market area No. 9, are expected to weather the downturn the best in terms of CAGR, with a decrease of only 0.2 percent, “due to a massive increase in federal government spending and the migration of laid-off banking professionals to jobs in the public sector,” Kagan said. DMA No. 28, San Diego, Calif., is also expected to hold its own for the most part, with a CAGR decline of only 0.5 percent.

“The outlook for 2009 indicates another grim year for broadcast revenues,” said Robin Flynn, senior Kagan analyst. “Those radio and TV station owners who are able to reduce expenses while continuing to transition their business models to develop digital assets and non-traditional revenue streams will survive and reemerge as more efficient operations. If broadcasters have an advantage over Internet companies, it is their reach within local communities, and their financial success will depend on how they work to meet the needs of the local market.” -- Deborah D. McAdams