Local TV suffers as revenue shrinks

Dwindling funds constrict programming options

Money is said to be the root of all evil. But in local television, the lack of it has become the root of all change.

The economic forces tearing at local broadcasting can be viewed from an assortment of depressing angles, including bankruptcy filings by once well-heeled group owners like Tribune and Pappas Broadcasting and the latest layoffs at Clear Channel. Any way you slice it, the business has fallen — farther and faster than almost anyone could have anticipated.

Not long ago, TV stations represented a license to print cash. Their valuable shelf-space could take a little-known Chicago talk host and turn her into a billionaire diva presiding over a multimedia empire. Mindful of their value, station managers were wined and dined at annual gatherings where program distributors spared no expense — sure, fly in Elton John — to make sure they felt appreciated.

Today, the revenue stream in the spigot is constricted, if not exactly run dry. Take a market like Los Angeles, which at its peak generated more than $1.5 billion in annual ad TV sales. Sources say aggregate revenue has fallen below $1 billion, and with the economy ailing — as one-time staples like local car dealers disappear — it figures to slip further in the coming year.

New sources of income aren’t materializing quickly enough to offset the ebbing tide. “There’s no way to mitigate the losses of the big categories,” says NATPE president Rick Feldman, a former general manager at KCOP in Los Angeles.

In the face of declining profit margins — including the unprecedented prospect of L.A. stations losing money — the local model is being rewritten by shifting demographics, new technology and the blunt force of economic gravity.

As the U.S.’ second-largest TV market, Los Angeles is unique in various ways. Yet given its proximity to the entertainment industry, its woes perhaps stand out more glaringly compared with the flush days.

Demographics have played a part. The L.A. metropolitan area is now 43% Hispanic and home to 17 Spanish-language radio stations, which, like Univision TV flagship KMEX, routinely sit atop the ratings. Two radio outlets recently switched to Spanish formats, which have become nearly as plentiful and diverse as English-speaking counterparts.

“Broadcasters have embraced the reality that they need to serve this community to a greater degree than they did before,” says Clara Carneiro, VP of multicultural affairs at the radio ratings service Arbitron.

Economic pressure has buffeted station operations on multiple fronts. Despite California’s economic mess, bureaus covering Sacramento have been shuttered. Infomercials now air in what were once considered plum timeslots for syndicated programs. In another sign of the times, longtime local newsradio option KFWB devotes its entire weekend to infomercials.

The days of big-moneyed news talent dominating markets and earning network-level salaries also have received a cold splash of reality. KNBC-TV recently gave the heave-ho to Paul Moyer, one of the last stalwarts whose multimillion-dollar annual compensation fit right in among top-line anchors.

Moyer’s exit follows KTTV’s John Beard and a host of other veteran anchors around the country — an exodus of talent that once provided a station’s strongest link to the local community.

Dwindling revenue has reduced risk tolerance and made it increasingly difficult to launch syndicated programming. At a producers’ forum, Michael Davies — the U.S. proprietor of “Who Wants to Be a Millionaire?” — called the local television model “extremely challenged,” thwarting efforts to establish new franchises.

Like everyone else, stations are shoveling resources into new media — from online video to secondary digital channels — but the returns thus far don’t equal the investment. Already postponed once, the analog-to-digital transition is closer to becoming reality, costing cash-strapped stations millions to implement the switch, and threatening potential chaos among the small segment of viewers still reliant on an antenna.

Finally, local TV and radio are being negatively affected more than broadcast journalists would care to admit by the corresponding decline of newspapers. “Rip and read” has long been employed to fill out newscasts, using local papers as tip sheets and unpaid newswriters. As more newspapers disappear, stations will have to stretch reduced staffs to cover their regions.

What’s the solution? None has yet presented itself, but developing growth areas — somewhere — must be part of plan. As one station exec who requested anonymity put it, “You can’t save your way to profitability.”

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