Television and Radio |

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.”

Spot TV ads drop

Broadcasters in top-10 markets like San Francisco are generally still profitable, Flynn said. Outlets in large markets are more dependent on national advertisers, so they’ve taken a bigger hit than broadcasters in smaller markets. In the first quarter of 2009, spot TV advertising by the top 200 Bay Area retailers dropped to an estimated $58 million from $62 million the year before, according to regional TV estimates by TNS Media Intelligence. And Bay Area radio stations – which collectively reach 5.5 million listeners a week – saw advertising revenue decline 27 percent in the first part of the year, according to a regional study by Miller Kaplan Arase Co.

“Never seen it this bad. Never,” said Mickey Luckoff, president and general manager of KGO-AM, who has been at the station more than three decades, much of that time with the news-talk broadcaster on top of the ratings chart. “It’s as close to a depression that I’ve seen in my lifetime.”

The downturn is even hitting new-media sites, with advertising down at some political blogs nearly 50 percent in this post-election year, and 10 to 20 percent at entertainment blogs, analysts said.

What do you need to set up an Internet radio station?

• CD player
• Ripper software (copies audio tracks from a CD onto a computer’s hard drive)
• Assorted recording and editing software
• Microphones
• Audio mixer
• Outboard audio gear (equalizer, compressor, etc.)
• Digital audio card
• Dedicated computer with encoder software
• Streaming media server

Getting audio over the Internet is pretty simple:

1. The audio enters the Internet broadcaster’s encoding computer through a sound card.
2. The encoder system translates the audio from the sound card into streaming format. The encoder samples the incoming audio and compresses the information so it can be sent over the Internet.
3. The compressed audio is sent to the server, which has a high bandwidth connection to the Internet.
4. The server sends the audio data stream over the Internet to the player software or plug-in on the listener’s computer. The plug-in translates the audio data stream from the server and translates it into the sound heard by the listener.

There are two ways to deliver audio over the Internet: downloads or streaming media. In downloads, an audio file is stored on the user’s computer. Compressed formats like MP3 are the most popular form of audio downloads, but any type of audio file can be delivered through a Web or FTP site. Streaming audio is not stored, but only played. It is a continuous broadcast that works through three software packages: the encoder, the server and the player. The encoder converts audio content into a streaming format, the server makes it available over the Internet and the player retrieves the content. For a live broadcast, the encoder and streamer work together in real-time. An audio feed runs to the sound card of a computer running the encoder software at the broadcast location and the stream is uploaded to the streaming server. Since that requires a large amount of computing resources, the streaming server must be a dedicated server.