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By the Project for Excellence in Journalism

Despite increasing competition, local television continues for now to be a very good business.

In contrast with other traditional media, for instance, ad revenues continue to rise in both even and odd year-to-year comparisons and local advertising spots do much better than national. And more news directors continue to say their newsrooms are profitable.

But there are still danger signs.

Ad dollars seem less secure than in the past, with national advertising showing the greatest signs of weakness.

When the final figures for 2006 came in, they did not quite meet expectations, another possible hint of leveling.

In 2007, there was the traditional non-election year slowdown in revenues, but early political advertising heading into the 2008 elections would make up for some of the loss.

For now, relative to other industries, the economics look good.


The local television business follows a now well-established rule of thumb. Odd years, or non-election years, do not do as well as even years – and 2007 was no exception. Projections for advertising revenues showed a modest drop in 2007, whereas figures for both 2006 and 2008 show growth.1

Advertising Revenues

As expected, advertising revenues – which make up the bulk of a station’s total revenue – were projected to fall modestly in 2007. Odd years tend to be down, and that was even more likely in 2007, given the strength of the previous year. The industry expects 2008 to be an even stronger even year.

According to projections by the media research firm Veronis Suhler Stevenson, ad revenues for television stations over all were expected to drop about 3% in 2007, coming in at $25.8 billion, compared with $26.7 billion in 2006.

TV Station Avertising Revenues
2003-2007 (in billions)

National Spot Local Spot Total

Source: Veronis Suhler Stevenson, 2007-2011 Industry Forecast, pg. 176-177
Note: Numbers are estimates

Local spots – or ads targeted at the station’s local viewers – are usually the bigger share of a station’s ad base and that is expected to continue.2 In 2007, local spot advertising was projected at nearly $15 billion to national spot’s $11 billion.

These projections are in line with those of other financial research firms. In December 2007, a Television Bureau of Advertising study using TNS Media Intelligence estimates found that the television ad market declined for the first nine months of 2007. Spending on local television was down 6.2%.3

Actual Ad Revenues in 2006

How accurate are projections? It varies year to year, but comparing revised numbers for 2006 to projections, actual advertising growth did not quite hit the mark. Analysts had projected a 10% growth, but final numbers indicate an actual growth of 8.5%. Though lower than estimated, it was still greater growth than seen in previous election years.

National spot advertising increased more slowly in 2006, growing 11% instead of the projected 16%. Local spot, on the other hand, did somewhat better than expected, growing nearly 7% vs. the 6% projected.

Local Advertising: Continuing Political Windfall

An early start to the 2008 presidential election already has proved a bright spot and spending for the year is expected to break records.

The Campaign Media Analysis Group projected $700 million in political ad revenue for 2007.4 While it is nowhere near the $2 billion in 2006, it was a substantial amount for an odd-numbered year.5

According to a JP Morgan analysis in October 2007, key local broadcasters, including those affiliated with the Big Four Networks (ABC, CBS, Fox and NBC), Sinclair, Hearst-Argyle and LIN TV, would see a boost of around $150 million from political ads alone by February 2008.6

Political Avertising Revenues
2000 -2007

Local TV Political Ad Revenue Total Local Ad Revenue Political as a Percentage of Total Ad Revenue
2007 (est.)
$700 million
$25.8 billion
$2 billion
$26.7 billion
$1.6 billion
$24.6 billion
$69.8 million
$25.9 billion
$60.5 million
$23.5 billion

Source: TNS Media Intelligence, 2007; Broadcasting & Cable, 2006; TV Bureau of Advertising, 200 & 2002; Morgan Stanley Estimate, 2004; Veronis Suhler Stevenson, 2007-2011 Industry Forecast for total figures.

As the year progressed, figures for political advertising only went up, with January 2008, the launch primary and caucus season, breaking records.

Iowa, which began the election calendar with a caucus on January 3, 2008, offered a good case study of spending. It was inundated by political advertising as early as the previous June. By December 28, 2007, the Campaign Media Analysis Group noted that Democrats had spent $23.7 million in television advertising in Iowa through the year, and the Republicans $9.5 million. Democrat Barack Obama led the way, spending $8.3 million. His rival Hillary Clinton and Republican Mitt Romney followed with $6.5 million each.7

There was a deluge of broadcast political advertising. According to a November 2007 Nielsen Media Research press release, Iowa voters were treated to more than 7,000 ads each from Romney and Obama, the two leading advertisers in their parties.8

Station Revenues

Average station revenues, which includes ad revenues and other revenue as well, were up 8% in 2006, according to PEJ’s analysis of 714 local television stations.9

Driven by the 2006 Winter Olympics and political spending, television stations took in $26 million on average, up from $24 million in 2005. This figure was not much higher than average station revenues in 2004, the previous election year, meaning that even a traditionally good year did not give local television the expected boost. Much of this was likely due to national ad revenues that came in under projections. This leveling could be an indicator that, for local stations, keeping revenues steady might become an accomplishment in itself.

Average Station Revenue
1995-2006, Average Across All Stations That Produce News
Design Your Own Chart
Source: BIAfn MediaAccess Pro

And even this average is deceiving. Local stations do not perform similarly across the country. The bigger (more populated) markets make disproportionately more money. The top 25 markets dominate the local television scene, with average station revenues of $80 million. This is much higher than the next bracket of markets (size 26-50), which make less than $30 million.10

Average Station Revenue by Market Size
1996-2006, Average Across All Stations That Produce News
Design Your Own Chart
Source: BIAfn MediaAccess Pro

Newsroom Economics

And how much of the economics of a local television station depends on news?

Though local stations do not break out these figures publicly, news generally makes the lion’s share of a station’s total dollars. The latest survey of news directors by the Radio-Television News Directors Association, released October 2007, confirms this. The proportion coming from news, despite a growth in hours broadcast, has stayed largely unchanged over the years.11 And fewer news directors than ever report losses for the year.

In 2006, news directors reported an average 42% of TV revenue coming from news. This is lower than the year before (45%), but within the same range as responses in recent years.12

News as a Percent of All Station Revenues
2002-2006, All Stations


Source: RTNDA/Ball State University Surveys
Note: Based on survey responses of news directors

More than half the news directors (56.2%) said the newsrooms were making profits, down about one percentage point from the previous year. In what may be a better indicator of newsroom strength, however, only 6.4% reported a loss. This was the lowest number since the question was first asked in 1996.

About one in 10 (11.5%) said their newsrooms were breaking even, and a quarter of news directors (26%) did not know or could not comment on profitability.

Local TV News Profitability
Design Your Own Chart
Source: RTNDA/Ball State University Surveys
Note: Based on survey responses of news directors

Looking at profitability by network affiliation, however, reveals that the profits are not evenly spread. Most news directors (61%) at stations affiliated with the Big Four networks (ABC, CBS, Fox and NBC) reported profits, but the majority at other commercial stations reported a loss (67%).

Within the Big Four networks, news directors at Fox stations had the best year – none reported losses, a modest 11% said their newsrooms broke even and the large majority (70%) reported profits.13 This mirrored their performance in 2005.

A clear majority of news directors at ABC (58%) and CBS (67%) also reported profits, but NBC stations seemed to have had a tougher year. Just more than half (51%) of NBC affiliated news directors reported profits in 2006, much lower than the 64% in 2006. According to the survey’s author, this might be a reflection of the tough year NBC had generally with its programming.


1. Arriving at definitive economic figures for local television stations is somewhat complicated. There is no centralized data source for the sheer number of stations in the country, with different market research and industry analysts providing different sets of data. This makes comparisons more difficult. For our report, advertising revenues figures are available from Veronis Suhler Stevenson and TNS Media Intelligence as well as trade publications. These were revised for 2006 once year-end data were in and estimated for 2007. We calculated station revenues using BIA Financial Network’s media database – again, year-end data were available for 2006. The database did not make projections for 2007.

2. Local spot typically makes up about 55% of station advertising, national the rest. Local spot is advertising by companies that are in the same market as the station. National spot advertising helps advertisers reach more than one market, but is a cheaper option than putting ads on the broadcast networks that are in seen in every U.S. market.

3. Television Bureau of Advertising, “2007 TV Ad Revenue Figures,” (Ad Revenue Track, Third Quarter Data), December 18, 2007:

4. Figure from the Campaign Media Analysis Group through personal correspondence on February 5, 2008. The group is a branch of TNS Media Intelligence that tracks political and issue based advertising spending. Online at

5. Paul R. La Monica, “Politics: Off Year, On the Money,”, June 25, 2007.

6. Diane Mermigas, “Election Ad Spend: TV Profits, But Times Are A’Changing,” MediaPost, October 24, 2007.

7. Patrick Healy, “ Iowa Saturated by Political Ads,” New York Times, December 28, 2007

8. Romney had 7,469 spots while Obama had 8,494 spots on Iowa local television as of November 18, 2007. Wayne Friedman, “Nielsen: Obama, Romney Aired Most TV Spots in ’07,” MediaPost, December 12, 2007.

9. The Project uses BIA Financial Network’s database to calculate station revenue; the last full year for which data are available is 2006. Since there are hundreds of local television stations in the U.S., the report (like previous ones) short-lists those that have news directors (to see if they produce local news), and are commercial and viable. Spanish-language stations are not included. The exact tally of stations cannot be the same every year since stations constantly change ownership or shut down or both, and news divisions are not permanent features of local stations and they may be added or removed.

10. According to Nielsen Media Research, there are 210 designated market areas in the United States. Each of these markets “identifies an exclusive geographic area of counties in which the home-market television stations hold a dominance of total hours viewed.” See Nielsen Media Research Web site,

11. The RTNDA Survey is annual survey of news directors. The latest survey was released in October 2007. It was conducted by Robert Papper of Hofstra University (formerly at Ball State) in the last quarter of 2005. In all, 974 news directors took part. A copy may be found in the RTNDA Communicator, October 2007 issue.

12. Robert Papper, “News, Staffing and Profitability Survey,” RTNDA Communicator, October 2007, p. 34.

13. The remaining 19% of news directors did not know or could not comment on newsroom profitability.