Digital Could Make Up 25 Percent of LIN Sales Soon
Digital sales at LIN TV could reach 25 percent of total sales within three or four years, CEO Vincent Sadusky told investors Thursday. That’s the company’s target and would put it ahead of broadcast peers, he said. Sales from LIN’s TV station websites, mobile applications and retransmission consent now make up about 15 percent of revenue, but all those categories have the potential to keep growing, he said. The company’s recent acquisition of RMM, an online ad company, will help it keep selling new online ad products that incorporate geo-targeting and advanced performance metric-based pricing, Sadusky said.
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LIN’s strategy with smartphone applications has been to arrive first in its markets with a quality product, Sadusky said. “When folks go ahead and put our icon on their PDA, there’s really no reason for them to have another source of local content on there,” he said. “It was really important for us to get out there early … and make sure we had something available for every platform, and not just the iPhone.” Though revenue from its mobile applications is still a small piece of its total interactive sales, it’s growing and attracting advertisers, he said. Auto advertisers and legal services have been buying the most ads, but retail could play a bigger role down the road, Sadusky said. “As technology advances we've had conversations with folks looking to do electronic couponing."
Pricing for ads on LIN’s TV station websites is improving as local advertisers learn how to successfully exploit the platform, Sadusky said. “It’s been a process to educate our local advertisers to understand the value of interactive, but we've come a long way and we now feel that our advertisers are competing for ad space.” Online, the bulk of LIN’s revenue comes from banner ads and a smaller but growing portion of sales are tied to pre-roll video spots, he said. About half of LIN’s online advertisers also buy spots on TV, Sadusky said. The rest are typically smaller advertisers who couldn’t afford TV spots and historically advertised in print media, he said.
Retransmission consent revenue should also continue growing, Sadusky said. Establishing the current industry average compensation of 20 cents monthly per subscriber from a pay-TV operator was difficult, he said. Increasing that fee with the help of the networks is something that’s very achievable over the mid term,” he said.
LIN is reaping benefits in markets where it runs more than one station, executives said. The extra station gives LIN more programming flexibility. In some areas, it has put local news on at 10 p.m. on its second station and found that time slot to be growing in viewers and revenue, said Scott Blumenthal, executive vice president of TV. Having a second station also gives advertisers more flexibility, particularly with heavy political ad spending approaching, he said: “The duoploy strategy has been beneficial in terms of keeping advertisers from getting crowded out” by political spots. Other advertisers seeking spots on LIN’s highest-rated stations are booking their time earlier in order to lock it in, he said. “Clearly, some advertisers have come in earlier, which is driving pace right now, to try to get in front of the political trend."
LIN’s new shared services agreement with Acme Communications involves stations in Albuquerque, N.M., Green Bay, Wis., and Dayton, Ohio. FCC ownership restrictions limit LIN from ever owning or operating the Albuquerque stations, where it’s shared services agreement mainly deals with back-office savings, Sadusky said. “In Green Bay and Dayton there may be a possibility …. to gain actual management of the stations."
LIN Q2 revenue rose 21 percent from a year earlier to $99.5 million. Digital sales gained 44 percent to $14.7 million. Net income was $3.6 million compared with a large write-down related loss a year earlier.