Insistence on high profit margins risks future of local stations, finds report

A comprehensive report on the news media in the United States released earlier this month finds that while local television stations were “enormously profitable,” they may be risking their future by favoring high profit margins rather than investing in the news product to maintain viewer loyalty in the face of increasing competition.

“The state of the news media 2006, an annual report on American journalism” from the Washington, D.C., -based Project for Excellence in Journalism examines the state of news across various media.

In the section devoted to local TV news, the report finds that pre-tax profit margins of 40 percent to 50 percent are common at the local level. The report questioned whether local TV journalism may be following a similar path taken by newspapers that have failed to invest in their news product at a time of stiffening competition.

The report also identified a continuing trend towards stretching local TV journalists thin by asking them to produce more programming and converting material for use on the Web without “a commensurate increase in their budget.”

Converting operations to the digital domain and online activities are also diverting resources away from on-air product, the report said.

The report identified the annual survey conducted by Bob Papper of Ball State University for the RTNDA as its most important source of information on local TV newsroom investment. It found:

  • A combined view of affiliate and independent stations, revealed that 44 percent increased their newsroom budgets and 26 percent said they stayed the same;
  • 49 percent of network affiliate news directors increased their news budgets, and 27 percent said they had not changed;
  • 37 percent of independent station news directors reported a cut in news budgets, and 34 percent could not comment or did not know.

According to the report, independents are “facing trouble ahead” in local news.

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