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Saturday, July 30, 2011

The Pulse of the Local Broadcast Economy

Over the last two weeks, I have canvassed a wide variety of media professionals on the state of the local broadcast marketplace. My sample consisted of TV and Radio station sales executives or general managers, local cable players, regional spots mavens, advertising agency media teams, buying services and a few independent media consultants.

The results were interesting but not overly surprising. The only thing that took me by surprise was the wide differences in broadcast and cable performance by region of the country. But, it made sense. There was a direct relationship between unemployment rates in a state and the vibrancy of the media markets within.

In capsule form, the questions asked were:

1) How is your market performing?
2) Why are advertisers holding back if things are soft?
3) Is corporate understanding if things are below budget?
4) Where do you think things will be in your market in six months?

On the broadcast and cable side, the overwhelming majority said that billing is below quota and that the marketplace is fairly to very soft. About 60% said that advertiser business was below expectations so they were not spending. Several stated that automotive was down sharply and attributed some of that to the Japanese Tsunami. Toyota and Honda, major players, have held back, but many felt that before the end of the year billing will pick up smartly. One executive reported that many Mercedes and BMW parts come from Japan and the slowdown there had a ripple effect on the availability of the premier German brands. Hence, less spending for blue chip vehicles.

American companies are doing well right now. As we write, they have a record two trillion dollars on their balance sheets. They continue to not hire aggressively if at all, raises are few and far between, and, other than their commitments to network TV and network cable, they are VERY cautious about advertising commitments.

This held true with my sample. One executive sent me an e-mail stating, “A month to month marketing mentality is taking place locally.” Another a thousand miles away echoed that sentiment by saying “buys are coming in at the last minute. We have scads of inventory so the money is most welcome. But, we cannot plan ahead at all and it is difficult to explain to the bean-counters in New York”. A third said, “Local retailers are scared. We cannot push many for a quarterly commitment. They go month to month.”

National business is very weak. The broadcasters and cable people almost all are below budget with their national projections. An east coast broadcaster with his feet on the ground says his corporate focus is to develop new business locally to offset disappointing national sales.

Radio is suffering pretty much everywhere. Also, scrappy sales teams are bringing in new clients by knocking on lots of doors but the new players tend to be very small players so the labor intensity of making sales goals is very high. A few markets reported sports formats are their bright spot in their radio station group.

How is headquarters reacting? This is a family oriented blog so I will not give verbatims on comments. ☺ Some say that corporate listens politely but then repeats the magic number that they want for the year. A friend told me that she has joined an organization in the last year known for pressuring their sales management. “I had been around for a while and thought how bad can it be? Well, now I know. When I missed 1st quarter, they began sending a jerk in from corporate to observe things. He looks at every expense item and I swear he counts paper clips”. Another told me that if he misses his numbers for the year, “I will be selling shoes by February.” Sales managers say that their local general managers get it but corporate does not. They still prattle on about debt service and shut them down when they try to discuss their local economies.

Regional differences are extraordinary. Right now, North Dakota has the lowest unemployment in the country at 3.2%. My few contacts there reported that things are fine. Local retailers are confident and investing in TV and radio. Citizens do not fret about losing their jobs so they buy new cars, go out to eat, and splurge on new clothes. A similar pattern comes from Nebraska and Oklahoma although not so strongly. An old friend in California who always saw the glass as half full is now a sourpuss. “Business is awful. I am way below budget and know that things will not turn around here soon.”

In Texas, which has been the strongest of the very large states, things are humming along nicely. Most Texans say things will be about the same six months from now but two see chinks in the armor and think the year will finish weaker.

Agency and buying service teams say that they are getting good deals. Most express surprise that the economy has not improved more by now since the 2008-2009 debacle. A few admitted that they are taking savings from a weak broadcast market and doing more in social media and mobile.

How does the future look? Some say it has to get better or work will be intolerable along with corporate pressure. A good friend says, “I have never worked harder. Things look a little better for the next few months but we are running hard to stay even.” The majority says things will be about the same by the end of the year with a few saying that it “will get worse before it gets better”.

Economic indicators continue to be weak. While each market is unique, it appears that most will not see any uptick until the record breaking political spending hits next year. In the battleground states for the Presidency and those with big Senate races, things may be pretty good even if there is no real business recovery. Right now the president’s re-election team is projecting a billion dollars for 2012 for Obama alone.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

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