In flush times, television stations are accustomed to 30 to 40 percent profit margins. But the recession is goring even these cash cows with a 14 percent drop in advertising revenue in the first quarter of this year compared to last at Bay Area TV stations, analysts say.
Ad revenue took an even bigger tumble at Bay Area radio stations, with a 27 percent decline during the same period.
The main culprit is the imploding auto industry, which provides from 20 percent to one-third of the advertising revenue for broadcasters. With General Motors and Chrysler announcing plans last week to close 1,900 dealerships during the next year, it will take years for advertising levels to recover at TV and radio outlets. “And when it does return, it will be different,” said Robin Flynn, senior analyst at SNL Kagan, who recently conducted a nationwide study of advertising on radio and TV stations and projected the 14 percent TV decline.
“All advertising-driven media have been hit hard by the recession, not just newspapers,” Flynn said. “So companies are really trying to get creative to make up for that revenue.”
Nearly 50 years ago, then-FCC Commissioner lamented in a to the National Association of Broadcasters that the once-promising young medium of Television had become a “vast wasteland.” Well, history is repeating itself as the once-promising medium of the Web is maturing into a vaster wasteland of cyberspace. The latest horrifying indicator comes in this recent from the Interactive Advertising Bureau, noting that 2008 Internet advertising revenues totaled $23.4 billion, up 10.6 percent from 2007. That makes Internet advertising the fastest growing advertising medium in history. Ever.