TV Stations Managing Inventory Tightly to Avoid Missing Out on Ad Rebound
Broadcast ad sales continued to rebound in Q2 from lows during the recession and the resurgence seems to be holding through Q3, executives told investors on quarterly earnings teleconferences this week. But stations need to be careful how they manage their inventory in coming months, because an influx of political revenue could limit stations’ ability to benefit from the rebound, they said. “We're in a pure supply-and-demand business and we raise the rates as the pressure dictates on the inventory,” said Steve Marks, chief operating officer of Sinclair’s TV division. “The political is going to be big, and that will cause pressure on the inventory. We're on top of it, we're managing it, our pace is terrific and we have plenty of great spots left to sell."
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Political ad sales could bring in record numbers this year, executives said. In the first half of 2010, Nexstar doubled the political dollars it received from the first six months of 2008. That rate may not continue, but sales will be high this year, said CEO Perry Sook. “The amount of money people have raised is substantial, and they're now starting to spend it in a material way,” he said.
Spending from political action committees and the parties has increased significantly since the 2008 elections, Sook said. Then, PAC and party spending made up 10-15 percent of political sales. This year it’s more than 35 percent, he said. “We don’t know if that is a sustained trend, but it is certainly a marked difference from the last three election cycles we've gone through,” he said.
Stations won’t know the effect of the Supreme Court’s recent Citizens United ruling until the 60 days before the elections, Marks. That’s when the industry will learn whether union and corporations previously restricted under campaign finance laws from buying spots during that period enter the market, he said. “It’s an unknown what the last 60 days will bring with issue advertising … but it can only be upside,” he said. “It’s just a question of how much."
Meanwhile, nonpolitical sales remain strong. At CBS, local ad sales are bouncing back faster than national sales, but local took a deeper hit during the recession, said CBS CFO Joseph Ianiello. Local advertisers are booking spots earlier than they were, a sign that they're either confident in their business or concerned about rates going up, he said. But local sales are still falling short of pre-recession numbers, he said. Nexstar’s experience was the opposite of CBS’s. Its national sales took the deepest dive during the recession, Sook said. Now national sales are coming back the strongest, he said.
The bounce-back is even lifting sales at stations that aren’t affiliated with a top-four network, said Marks. “Some of our highest pace stations for Q3 happen to be MyNetworkTV and WC affiliates,” he said. They typically attract more local advertisers because the stations don’t draw enough viewers to entice national advertisers, he said.