Agregue a sus temas de interés Cerrar
lunes, 6 de abril de 2020
PHOTO: CRYSTAL MAZZA
Viewers seek constant updates, but advertisers are cutting back; ‘more cancellations than new orders’
The Wall Street Journal
Local television stations are experiencing a rare surge in viewership as more Americans tune in for coronavirus updates. But the stations are unlikely to benefit financially because of a cutback in advertising spending.
“We have more viewers than ever, but advertisers are unfortunately stuck in the same economic boat as many of us,” said Patrick McCreery, president of the local media group of Meredith Corp., MDP -0.28% which owns 17 TV stations.
Local broadcast journalists are producing segments from their homes and on the street, as they are considered essential workers. Many viewers are leaning on local TV news for constant updates in their communities.
By mid-March, Meredith’s afternoon and evening news viewership had risen by up to 30% since the beginning of the month. Nexstar Media Group Inc., NXST -7.28% which owns 196 stations in 114 U.S. markets, experienced ratings jumps of at least 35% during that stretch.
Sinclair Broadcast Group Inc., SBGI -4.41% which has 191 TV stations in 89 markets, declined to provide its overall TV audience numbers but said viewership for its ad-supported streaming service STIRR nearly doubled in recent weeks. Scott Livingston, Sinclair’s senior vice president of news, said the initial spike in news viewership was in Seattle, the first location of the coronavirus outbreak in the U.S.
Spikes in local-TV viewership aren’t unusual when a specific market gets hit by a major disaster, such as Louisiana in the aftermath of Hurricane Katrina in 2005, Nexstar Chief Executive Perry Sook said. What’s different this time, he said, is that the coronavirus pandemic “is a disaster that’s playing out across the entire nation.”
Local broadcasts aren’t the only news stations experiencing surges in audience. Daytime cable news viewership for channels including CNN, Fox News, MSNBC and Fox Business more than quadrupled from a year earlier, according to measurement firm Samba TV.
Charter Communications Inc.’s local Spectrum News, offered to traditional pay-TV subscribers, experienced a 71% increase in household viewership in mid-March compared with prior weeks.
The rise in viewership comes as companies pull back on advertising spending.
“It’s a tale of two cities,” said Kyle Evans, a media analyst at Stephens Inc. “On one side your viewership has been teleported back to the 1950s, when people crowded around their TV at home and watched the news. On the other side, advertising is dropping off and not matching those viewership numbers.”
Advertising is often among the first things cut by companies looking to preserve cash in times of crisis, because it is seen as discretionary spending within many corporations, marketers said. Ad-buying giant Magna Global last week slashed its U.S. advertising forecast as economic conditions continue to worsen because of the coronavirus pandemic, whose impact it likened to “a combination of the Great Recession and 9/11.”
The coronavirus outbreak’s impact on sporting events also affected local channels. The canceled NCAA basketball tournament led to advertising cancellations at CBS network affiliates. The Olympics provide a boost in advertising revenue, according to the local TV broadcasters’ public filings, but the Tokyo Olympics have been postponed until 2021.
Local TV broadcasters say the automobile industry makes up a key portion of advertising revenue, but auto sales are dropping. Political advertising is another large contributor to local TV stations’ revenue, and the postponement of many primaries because of the virus means that advertising revenue is likely to be pushed to later in the year, company executives said.
Local TV broadcasters declined to disclose the extent of the advertising hit. Meredith’s Mr. McCreery said the company has been in contact with advertisers.
“Net-net, there is a decline in advertising, and more cancellations than new orders,” said Kevin Latek, executive vice president at Gray Television Inc., which owns and operates TV stations in 93 markets. However, he said, there have been some new advertisers taking advantage of the rise in viewership.
Advertising accounted for between 31% and 46% of total local TV revenue at Nexstar, Gray, Meredith and Sinclair for calendar year 2019, according to an analysis of the companies’ financial statements. Much of the broadcast stations’ revenue comes from fees paid by pay-TV distributors in return for carrying their channels, known as retransmission-consent fees. These are often lucrative fee deals that have increased in recent years.
Mr. Sook, Nexstar’s CEO, said the company is “less exposed to core advertising losses than we were in 2008, when 90% of our revenue was tied to ads.”
“That’s the evolution of the company and the industry,” Mr. Sook said.
Nexstar’s digital advertising has held up “surprisingly well,” he said, thanks to the growth of its channels’ websites. Similarly, Gray, Meredith and Sinclair’s websites associated with news channels are seeing record visits.
The coronavirus crisis’s impact on advertising revenue will be dependent on how long Americans are ordered to stay inside, executives said.
“Historically, when you see a pause on ads for a period of time there is pent-up demand for when things normalize,” Mr. Sook said.
By Lillian Rizzo