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.

If you’ve looked at television sets at any of the big electronics retailers in the United States lately, you know that digital TV, or DTV, is a big deal right now. Most stores have whole areas devoted to digital TV sets. You’re also hearing a lot about four other topics:

• HDTV and HDTV broadcasts
• Digital satellite services
• Digital cable
• DVDs and DVD players

Unless you are among the people in the United States who have purchased a DTV set, what you have in your living room is a normal analog TV that seems to be working just fine despite all the hype. ­ Most people, faced with this level of product proliferation, can only ask, “What the heck is going on here?!”

On June 12, 2009, television stations in the United States completed the transition from analog to digital broadcasting. Consumers receiving local television signals over analog antennas now must use converter boxes to receive programming on their TVs. This deadline was pushed back several times in the last few years because of both broadcasters’ and consumers’ inability to meet the FCC’s criteria for a successful transition to digital broadcasting.

The change was last scheduled to take place on Feb. 17, 2009, but was pushed back one final time to allow more people to purchase new TVs or converter boxes to allow them to make the transition. Some stations, however, switched to digital broadcasting in February 2009 anyhow because they’d already contracted time to broadcast on digital transmitters and staying analog would require a costly budgetary adjustment. Buy television with payday advance