Local and national spot advertising sales will see modest, single-digit growth for the foreseeable future, broadcast industry analyst Marci Ryvicker of Wells Fargo Securities said at the TVB Forward conference Thursday in New York.
In a 20-minute presentation, Ryvicker covered the outlook for ad sales, announced a revised forecast for political ad spending and discussed the impact on the local broadcasting business of the FCC’s incentive auction.
She also forecast “high single-digit growth in net retransmission dollars for the foreseeable future.…
“Net retransmission consent is becoming a bigger portion of EBITDA [earnings before interest, taxes, depreciation and amortization],” she said.
Ryvicker is bullish on net retrans growth because she feels that the companies offering the new “skinny bundles” will inevitably have to begin including live local television to be successful, creating the potential for a new stream of net retrans dollars for stations and group operators.
With just a few weeks left in the election campaign season, Ryvicker is revising her political advertising outlook downward. She said she sees total political ad spending this year in all media to be about $5 billion, down from a previous forecast of $6 billion. For TV stations, she’s forecasting a total political ad spend of $2.65 billion, down from the $3 billion-plus predicted earlier.
In national spot sales, she’s forecasting 2% growth in 2017, up from 0% this year. In local ad sales, she sees 2% growth, and for network TV sales, 3% growth, she said.
Ryvicker predicts spending by phone companies in the FCC’s incentive auction to range from $28 billion to $37 billion. She acknowledged that her view of the potential spending in the auction is far lower than the $60 billion-$80 billion being forecast by others. She said uncertainty over the auction and its outcomes are causing instability in broadcast stocks.
But she expects smoother sailing in the financial markets once the dust settles. She predicted there will be a wave of consolidation in TV station ownership following the auction period.
Overall, she said she was optimistic about the local TV business. In her view, the skinny-bundle trend and the implementation of ATSC 3.0 present opportunities for new revenue streams for local television.
“Broadcast will remain healthy for the foreseeable future,” she said.
