Local TV Defies Sector Lag in 2011

BIA forecasts that by 2015, around 25 percent of all ad dollars spent in local media will be in digital media.
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CHANTILLY, VA.:TV stations defied a trend of publicly held local media companies performing worse last year than the overall stock market. All local media stocks in BIA/Kelsey’s Local Media Index fell 18.7 percent, while local TV station stocks were up 6.1 percent.

BIA/Kelsey said its analysts found a “shift toward growth in digital revenues” within an overall “flat local advertising economy.”

Subsectors such as Yellow Pages, down 77.5 percent, and newspapers, down 27.8 percent, brought the overall LMI down. Positive elements included online advertising and search, up 8 percent; diversified media, up 7.8 percent, broadcast TV, up 6.1 percent; and radio, up 2.1 percent.

The index demonstrates that local media values could be “more volatile to the perceptions about the future of the economy and local ad spending than the S&P itself,” according to Mark Fratrik, the firm’s vice president. “Last year’s poor performance of the LMI was caused by deep concerns over the health of the global economy in Q3 and the belief that businesses would severely cut back on their advertising spending. While the last quarter of 2011 saw a rebound in media stocks, the drop-off had been too significant to overcome.”

The chart at left tracks local media stocks vs. the S&P 500

BIA/Kelsey sees the prospects for local media companies improving along with the economy in 2012. The anticipated strong political advertising year and the outlook for radio and television stations should bolster several sectors in the LMI.

With the maturity of digital technologies driving the delivery of content across multiple platforms, advertising opportunities are significantly increasing, and local media firms are starting to book incremental sales. According to BIA/Kelsey’s forecast, by 2015, around 25 percent of all ad dollars spent in local media will be in digital media. Increasingly, this will occur in coordinated cross-platform media buying with integrated creative and marketing campaigns. LMI tracks the local media sector, with a market capitalization of $2.2 trillion.