Straight-line income declines of as much as 30 percent, were recorded by of some of the US’s largest broadcast groups in the fourth quarter of 2008, according to an SNL Kagan analyst.
Due mainly to the drop in car advertising, double-digit revenue declines are expected to continue through the first half of 2009. However, it is anticipated that in the third and fourth quarters of the year, the financial situation will improve, according to SNAL Kagan’s senior analyst Justin Nielson.
According to the report, local and national spot TV ad revenue dropped 6.9 percent to $20.1 billion for all of 2008.
“There were some quarters down in 2000 and 2001, but this is the largest we’ve seen in quite some time going back to the early 1980s,” Nielson said. In order to overcome the dramatic drop in revenue, broadcast stations have made “massive” operating cuts which encompass retrenchments, cuts in management salary, outsourcing and combining news production units.
The figures for capital spending is down significantly but the SNL Kagan says this has possibly been influenced by heavy capital spending over the past couple of years to prepare for the DTV conversion. For stations that already have made their DTV conversion, the Nielson said he expected double-digit declines in capital expenditures.
