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Local TV

Intro

By the Project for Excellence in Journalism

One of the few sources of news that continues to be popular, local television news is nevertheless facing the challenges of new technology and new consumer lifestyles.

In 2007, for the second year in a row, local news ratings for evening news and late night news were down, and morning news just held steady. Stations responded, as they have before, by experimenting with their schedules. According to new PEJ analyses, stations in two-thirds of the top 25 markets added or shifted newscasts in 2007.

Financially, though, the business remains robust. The traditional non-election year slowdown had ad revenues dropping only marginally in 2007, but they were still better compared to the previous “odd year” numbers. Local advertising spots continued to earn more than national, and with a closely contested race for the president likely, political advertising is expected to make 2008 a very strong year.

Newsrooms are a big factor in the economic success of local television. They contributed 42% to a station’s total revenue, according to local news directors. And the majority of these news directors say their newsrooms are profitable.

Also helping the industry is the reputation it enjoys on Wall Street. Continuing a trend notable a year earlier, stations were vigorously bought and sold in 2007. Many more stations changed hands than in the previous years, with many private equity funds viewing them as good investments.

Further, the success of Federal Communications Commission Chairman Kevin Martin's efforts to end the ban on cross-ownership in the country’s largest markets could lead to more transactions.

Within the newsroom, more than half of news directors reported increasing their budgets, with the money going to technology while staffing and salaries were flat. At the same time the amount of local news on-air increased, as did the amount shared with other stations and other platforms -- most notably, the station's Web sites. While business is good, inside the newsroom the trend of stretching people and resources thinner continues. The one place where we find staffing growth is online.

Television stations also geared up for the mandated transition to digital television, which, despite all the hiccups, seems on track to be in place by the February 2009 deadline.

In what could be a trend for the future, dollars and viewers seem to be going to newer distribution platforms, and the promise of additional digital streams is something stations are looking forward to. The future for local television seems to depend on how well it can capitalize on its existing strengths – content and reach – as it adapts to newer technologies.

Audience

By the Project for Excellence in Journalism

Local television news audiences continued to decline in 2007, and evening newscasts were hardest hit.

In response, many stations shifted their news programming to new timeslots, trying to fit changing lifestyles. It is too soon to know whether the strategy will work.

Ratings and Share

By our analysis, local news ratings, at least for the four major network affiliates that command the largest share of the audience, dropped throughout the day and throughout the year. Their share of viewers, a different metric, at best held their own.

For the second year, we examined ratings and share data from the four sweeps months — February, May, July and November – that stations use to set their rates for advertising. In each of those months, we looked at the ratings and share of all stations affiliated with the Big Four networks (ABC, CBS, NBC and Fox) across the country.¹

Ratings are the percent of households watching a program at a given time among all households in the market. Share is the percent of households watching a particular program of just those households that have their sets on. They are the key metrics for audience in television. Ratings give you a number for a program’s average audience. Share tells you the percentage of television viewers at that moment who are watching that program, their market share.

Local News: Change in Ratings
Sweeps, 2007 vs. 2006

Source: Nielsen Media Research, used under license
Note: Numbers include ABC,CBS, Fox and NBC Affiliates

Local News: Change in Share
Sweeps, 2007 vs. 2006

Source: Nielsen Media Research, used under license
Note: Numbers include ABC,CBS, Fox and NBC Affiliates

Early Evening News

Increasingly people are not at home or not opting to watch news (or any other programming) in the early evening around the dinner hour.

Local newscasts between 5 p.m. and 7 p.m. saw a drop in ratings and share in three of the four sweep months in 2007, according to our analysis.⁴ The only exception was in February when numbers saw no change from the year before.

Year to year, ratings were down 3% in May, 7% in July, and 6% in November. In February, ratings were flat from 2006.⁵

Average Early Evening News Ratings

Comparing Performance Year-to-Year in Sweep Months

Design Your Own Chart

Source: Nielsen Media Research used under license Note: Numbers Include ABC, CBS, FOX and NBC affiliates

Share followed a similar trajectory. It was flat in July, and down in February (7%), May (8%) and November (8%). This suggests that increasingly people are not watching television at that hour, let alone news.

If we examine an hour earlier, 4 p.m., which is becoming popular with local stations that often advertise it as the first evening news hour, ratings look no better. The same is true if one examines the 7 p.m. to 7:30 timeslot, a time when some local stations are adding newscasts to follow the national network news broadcasts.⁶

Evening News Ratings
Sweeps Months, 2007

Source: PEJ Analysis of Nielsen Media Research, used under license
Note: Numbers reflect the average rating of local newscasts on ABC, CBS, FOX and NBC affiliates that air during these timeslots in their time-zone.

Late News

Late-night news, the shows that follow prime-time entertainment programming, fared similar to early evening.

The only month in which ratings were up over the year before was February – when they rose 3% (an increase of 0.1 points). For the remaining three sweeps months, ratings were down more than 5% (6% in May, 7% in July and 7% in November).

Average Late News Ratings

Comparing Performance Year-to-Year in Sweep Months

Design Your Own Chart

Source: Nielsen Media Research used under license Note: Numbers Include ABC, CBS, FOX and NBC affiliates

Share in late night was flat in February and July, according to our analysis, and fell 14% in May and 8% in November.

(The Project has begun to collect data for the news that comes earlier, during prime time, typically on Fox stations at 10 p.m. in Eastern and Pacific Time zones and 9 p.m. Central and Mountain. A year from now we will have comparisons to track their audience trends. (See Methodology Sidebar.)

Local News in the Morning

Early morning news, the local programs that come on before the network morning shows at 7 a.m., had been a lone growth area for many local stations around the country in recent years. In 2006, however, we found even this time slot had begun to suffer audience declines, with both ratings and share falling in every sweep month.

In 2007, the news was not quite so bleak. While the size of the audience remains less than half that of evening or late night, the newscasts between 5 a.m. and 7 a.m. held on to their viewers.

Ratings were unchanged in the sweep months of May, July and November. And in February 2007, the most positive month in this accounting for all timeslots, they were up 7% (0.1 rating point).

Morning News Ratings

Comparing Performance Year-to-Year in Sweep Months

Design Your Own Chart

Source: Nielsen Media Research used under license Note: Numbers Include ABC, CBS, FOX and NBC affiliates

Share was flat in July and down the same amount (6%) in February, May and November.

A number of stations, particularly Fox affiliates, also extend their local morning news beyond 7 a.m., to 8 a.m. and even in some places to 9 a.m. (Fox airs a nationally broadcast morning show of its own, the Morning Show with Mike and Juliet, in 15 major markets that begins at 9 a.m.) A few CBS affiliates that decline to use the Early Show feed from the network also air local news during these hours.

These later morning programs saw ratings in 2007 similar to and in some ways more favorable than the early morning block. (The Project in future years will track the growth patterns of these audiences.)

Morning News Ratings
Sweeps Months, 2007

Source: PEJ Analysis of Nielsen Media Research, used under license
Note: Numbers reflect the average rating of local newscasts on ABC, CBS, FOX and NBC affiliates that air during these timeslots in their time zone.

Non-Affiliates

If we examine independent stations, those not affiliated with the big four networks that air local news, the universe shrinks considerably. Only about 40 of these stations in the country that run news have large enough audiences for Nielsen Media to track, according to data from the ratings company. Their performance in 2007 mirrors that of the affiliate stations.

In the early evening block, according to the last 2007 sweeps period (November), the independent stations monitored saw ratings unchanged, but a drop in share. Comparing November sweeps of 2007 to those in 2006, ratings stayed the same (0.5) but share dropped a point (from 2 to 1).⁷

In the late news block, both ratings and share were down. Again, comparing November to November, ratings fell to 0.2 points in 2007, from 0.7 in 2006 to 0.5 in 2007. Share fell a point from 2 to 1.

The morning news hours numbers were flat. Of the stations for which Nielsen has data, ratings rose 0.3% and share held steady at 3 in November 2007 compared with the same period the year before.

Shifting Schedules

As stations contended with falling ratings, there was good deal of talk in 2007 about stations shifting their newscasts to new timeslots to adjust to changing lifestyles.

To find out how widespread the phenomenon of time shifting might be, PEJ this year examined data for stations affiliated to the Big 4 networks in the top 25 designated market areas (DMA) in the country. From data licensed from Tribune Media Services, we took one weekday in November 2007 and compared it with the corresponding weekday in 2006.

Stations in two-thirds (15) of the top 25 markets added or shifted newscasts in 2007, according to the analysis. In all, 24 stations (of 106) in these markets did some time shifting, or just under 25%. The majority of these changes occurred during the early morning hours.⁸

New newscasts were added starting as early as 4:30 a.m. There were also instances of stations repeating their late night newscasts in the overnight hours, with additions virtually every hour – from midnight (Phoenix, Dallas), 1 a.m. (Tampa), 2 a.m. (Los Angeles) to 3 a.m. (Atlanta and Portland).

Shifting Schedules
Top 25 Markets, November 2007 vs. November 2006

Source: PEJ Analysis of Tribune Media Services data, used under license

Evening was not as popular a time for adding new newscasts among the network affiliates in the top 25 markets. But even among the top markets, we did find additions, in three markets – Orlando (6 p.m.), Washington, D.C. (6 p.m.) and Philadelphia (5 p.m.).

Another trend among the big markets appears to be to eliminate earlier newscasts in favor of later ones. In both Miami and New York, for example, the NBC affiliate (WTVJ and WNBC, respectively) got rid of the 5 p.m. newscast in favor of one at 7 p.m.⁹

Robert Papper, a television analyst at Hofstra University, also notes that stations can time shift in another way, by producing news for other stations in the market that run at times when their own newscasts do not. This can allow them generate revenue for news without altering their own schedules. It amounts to time shifting of a sort, across channels. Papper estimates that this is particularly popular during the evening. Many of these newscasts run in the last hour of prime time, competing often against Fox.

Our analysis also does not reflect the trends outside the top 25 markets. And there are a growing number of independent and local cable stations that air competing newscasts in the evening, which are often effective in luring viewers away from the Big Three (ABC, CBS and NBC) newscasts. The traditional early evening block also barely has any Fox affiliates, which tend to air news later, at 10 p.m.

Thus, if you look at the larger picture, local television news is now populated by not just the big network affiliates, but also by local cable and non-affiliated stations, and not just by news at the traditional early evening and post prime-time news slots.

Changes in Audience Measurement

As television audiences decline, the industry adopted a new system or “currency” in the industry language, to measure viewership in 2007 (see Advertising Chapter).

Rather than measuring viewers during program minutes, the industry began measuring viewers of commercials aired during the program. The new metric looks at average rating for all commercials aired in a particular show – starting with when it aired live and continuing over the next three days (giving it its industry nickname “C3”).¹⁰

Until now, advertisers decided what time to air and what price to pay for their ads based on ratings for a specific program – the higher-rated a program, the more advertisers wanted to place their ads during it and, consequently, the more they were willing to pay. Now, they will purchase advertising time based on average viewership of the commercial breaks during that program.

This marks a huge departure, and the new measuring system was preceded by wide debate about technical validity (see last year's Report). After years of back and forth, in March 2007, all the key stakeholders in the ratings metrics battle – broadcasters, advertising agencies (which were agreeable) and cable companies (which weren’t) – finally agreed to adopt the new ratings as the currency for buying and selling ads.

Despite all the concerns and speculation, preliminary results of the new ratings did not really alter the results.

Nielsen Media – the predominant television audience measurement agency in the United States – released commercial ratings for the week of September 24 in October, 2007 and found that total viewership for commercial breaks on the broadcast networks was, on average, just 3% lower than it was for viewership of the respective programs. Comparing the top programs using the C3 ratings to the older ratings saw the same top 10 programs, with a slight difference in their ordering.¹¹

These results were similar to those found during the trial run of the new ratings, released in July 2007. Those had found a 5% to 10% drop in the number of viewers who watched ads, compared to the show itself. The drop was somewhat higher for cable than broadcast networks.

The move was also seen as an acknowledgment to consumption realities. Fewer people in the U.S. now watch a show when it airs live and are increasingly adopting other means – including digital video recorders, video-on-demand options and/or Web video – to view them at their convenience.¹²

The new C3 ratings were one of the many changes that were part of Nielsen Media’s “A2/M2” endeavor to revise television ratings to keep pace with actual consumption practices (see last year's Report).

The other big change was Nielsen’s aim to measure more markets electronically. Nielsen reduced the number of markets with handwritten diaries and rolled out more Local People Meters to take their place – these electronic devices provide a more accurate representation of viewing habits (although Nielsen still does not measure out-of-home TV viewing.)

In 2007, the Local People Meters were working in the top 13 markets, up from the 10 the year before. The plan is to reach 56 markets by 2011.¹³ According to the company, 56 markets would mean that 70% of U.S. households will be measured by the People Meters.

How Nielsen Media Measures Viewers
In the 210 U.S. Television Markets

Source: Nielsen Media Research Web site; Broadcasting & Cable

Alongside this transition, Nielsen Media also aims to triple its core national television ratings panel to 100,000 people (from its current figure of 35,000).¹⁴ This sample is what is used to determine television ratings and share.

The Yardstick

To gauge audience, the television industry relies on two metrics — share and ratings . Share indicates the percentage of the television sets in use that are tuned to a program at a given time. If 500 television sets are turned on in Orlando, Fla., and 250 are tuned to the 7 p.m. news hour on WKCF-TV, then the station gets a 50 share for that time slot.

Ratings, on the other hand, step back a level and indicate the percentage of households tuned to a program out of all households with television sets — not just those in use but also those that are turned off. In the same example, if Orlando had 1,000 television sets in total, with 250 tuned to WKCF-TV, then it would get a rating of 25.²

In previous reports, PEJ gathered the May sweeps audience data for network-affiliated stations using the Nielsen audience estimates that were included in the database from BIA Financial Network, a media research and investment firm. We then calculated averages for the early-evening and late-night newscasts, combining them into a national average. The data, going back to 1997, allowed us make comparisons year to year.

With the 2007 report (last year), we expanded our data sample to get a different perspective. We now look at local news market audience by looking at ratings and share during the four sweeps months — February, May, July, and November – which are the months advertisers look to decide ad rates. Our sample has begun to include Fox-affiliated stations, although it does not have trend data from earlier years. (Fox stations are more likely to run news at 10 p.m. Eastern and Pacific and 9 p.m. Central and Mountain time than any other time, counter-programming against the entertainment shows on the stations affiliated with the other three networks.³) It does not yet include other stations that air news, a universe that Robert Papper, a television analyst at Hofstra University, estimates to be 280 to 300 stations, about 200 of which have their newscasts produced for them by a network affiliate (see also Shifting Schedules).

Footnotes

1. The four sweep months are when Nielsen Media Research measures television audiences to help the industry determine advertising rates for TV stations. We took Nielsen data for all the stations affiliated with the four biggest local television networks in all designated market areas (DMA). That gave us the ratings and share for an average local newscast in each time slot in each sweep month. According to Nielsen Media Research, the DMA “identifies an exclusive geographic area of counties in which the home-market television stations hold a dominance of total hours viewed.” There are 210 DMA's in the United States. See Nielsen Media Research Web site, http://www.nielsenmedia.com.

2. Share tells a station how it is performing compared with the other stations in the local area. Ratings give a sense of the total audience and are used by advertisers to determine what price they are willing to pay for an ad on the particular program. Webster, J., Phalen, P., & Lichty, L., (2000) Ratings Analysis: The Theory and Practice of Audience Research, Lawrence Erlbaum Associates.

3. Data in previous reports were limited to stations affiliated with ABC, CBS or NBC. We remained consistent with this approach year to year for the purposes of a trend over time. Other stations were not included either because they did not carry news or, as in the case of Fox network affiliates, they aired news in non-traditional time slots, particularly during prime time. The time slots we measure represent the traditional timing of local newscasts.

4. For early evening news, we took newscasts between 5 p.m. and 7 p.m. in the Central and Mountain Time zones and 6 p.m. to 8 p.m. in the Eastern and Pacific Time zones. For late news, we took 10:00 p.m. to 10:30 p.m. in the Central and Mountain Time zones and 11:00 p.m. to 11:30 p.m. in Eastern/Pacific.

5. The evening news broadcast in February 2007 had an average rating of 3.6 points. Each rating point represented 1,114,000 viewers in 2007, according to Nielsen Media Research. One rating point refers to 1 percent of the television viewing universe (or 111,400,000 as of spring 2007, according to Nielsen).

6. There are instances where the network news itself airs at 7 p.m., such as the NBC news broadcast in markets like Washington, D.C.

7. According to Nielsen Media, the non-affiliated stations air news in the early evening in only about 20 markets (of 210), in the late night in about 30 markets, and in the morning in only 18 markets.

8. While it does not constitute time shifting per se, stations can also generate revenue by producing news for other stations in the market at different times than their own newscasts. Some 206 stations in the United States now purchase newscasts from other places.

9. Marisa Guthrie, “Stations Kill ‘Live at Five,’ ” Broadcasting & Cable, September 10, 2007.

10. Viewers who watch the commercials on the day the program is aired (“live” ratings) and those watch it over the next three days using digital video recorders. MediaPost, May 14, 2007.

11. Advertising Age, October 16, 2007

12. Nielsen Media has the technology to measure either the average rating of all commercials in a program or the ratings of each individual commercial. MediaPost, March 21, 2007.

13. Alex Weprin, “Nielsen National TV Ratings Panel Expanding More than Threefold,” Broadcasting & Cable, September 26, 2007.

14. There are plans to make the people meters active in five more markets in 2008, 12 in 2009 and 2010 each and 14 in 2011. In 2007, there were 12,000 homes in the national panel and Nielsen aims to increase it to 37,000 homes in 2011 (reaching 100,000 people). Nielsen pointed out, however, that the effective sample size will only be 17,000 homes after the geographic distribution of the 56 people meter areas is considered. The “effective” size in 2007 was 10,000 homes. Alex Weprin, “Nielsen National TV Ratings Panel Expanding More Than Threefold,” Broadcasting & Cable, September 26, 2007.

Economics

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.

Revenues

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)

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

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

1996-2006

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.

Footnotes

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,” December 18, 2007. Online at TVB’s Research Central (Ad Revenue Track, Third Quarter Data), http://www.tvb.org/nav/build_frameset.asp?url=/rcentral/index.asp.

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 http://www.tnsmi-cmag.com/index.asp.

5. Paul R. La Monica, “Politics: Off Year, On the Money,” CNNMoney.com, 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, http://www.nielsenmedia.com.

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.

Ownership

By the Project for Excellence in Journalism

As 2007 drew to a close, Wall Street continued to see local television stations as a good business bet.

The top ownership groups remained stable, but some companies, including Belo, split themselves in two, separating their print and broadcast operations to highlight the higher value of their television holdings.

And, continuing a trend notable the previous year, stations were often bought and sold in 2007.

Also during 2007, media ownership rules again made headlines. Federal Communications Commission Chairman Kevin Martin pushed the panel for a contentious, late-year vote as he tried to advance an overhaul of media ownership regulations.

A Season of Sales

One indicator of the strength of local television news — particularly in contrast with print — was that sales of local television stations once again were plentiful in 2007, fueled by their attractiveness to investors and advertisers, although they did not match total dollars from 2006 sales.

In 2007, 294 stations changed hands, according to market research firm BIA Financial Network, compared to the 202 sold in 2006. There were no big-name station sales, and all of this activity amounted to just $4.6 billion in sales; in 2006, the stations sold had a price of $18.1 billion.¹

Transaction Value of TV Station Sales

2002-2007

Design Your Own Chart

Source: Broadcasting & Cable, April 24, 2006; BIA Press Release, January 10, 2008

According to thinking on Wall Street, television stations continue to make good business sense for a number of reasons.

In the summer of 2007, BIA Financial reported stock prices of publicly traded television groups had shown double or triple the growth of the overall market.²

And not only do stations continue to bring in money on their traditional strength – regional advertising (see Economics) – but buyers also were betting on their revenue potential in three other areas: the digital spectrum, station Web sites (see Online Trends) and retransmission fees from local cable operators that pay for content.

The first two both offer local stations more ways to attract advertisers – the digital spectrum will give a station the ability to air multiple streams of content, each of which could be a source of advertising revenue, while the Web sites are being developed to attract both viewers and advertisers who prefer the Internet.

Retransmission fees, which refer to the fees local stations charge cable, satellite and telephone companies for transmitting their content, are a new and growing source of revenue for local television stations. According to Veronis Suhler Stevenson, stations earned 30 cents to 50 cents per subscriber in 2006, resulting in millions of dollars of revenue. Local station groups cite retransmission consent as a big boost to their bottom line, and see it as a potential to offset weak ad sales.

In November 2007, LIN TV announced that retransmission fees contributed substantially to the 134% increase in its third-quarter revenues in 2007. The Sinclair Broadcast group and Hearst-Argyle also saw third quarter revenues rise 6% and 18% respectively, and attributed growth to the retransmission fees.³

Several of the specific sales and acquisitions -- including those by Nexstar Broadcasting, LIN TV, Raycom Media and Fox Television -- appeared to continue a trend that began when Emmis and Clear Channel found they could sell their television stations for a profit (see last year's Report).

In May 2007, LIN TV and Nexstar Broadcasting Group hired consultants to advise on a potential sale of their television properties – each company owns, operates or provides content to 29 stations across the country . LIN TV is one of the top 20 broadcast owners in terms of revenue and operates in the top markets as well. Eventually, both companies took themselves off the market after a strategic review. In August 2007, Nexstar announced that market conditions were not conducive to a sale. In December 2007, LIN TV also took itself off the market, deciding to build its business before considering a sale.⁴ However, this decision was more an indicator of the market than the station groups and analysts remained optimistic about its chances. According to Mark Fratrik, vice president of BIA Financial Network, “the business is good and, while companies see a good opportunity in private-equity bids, for most, the event is not make or break.”⁵

In November, Raycom Media, one of the top 20 local station groups in the country, added three more stations to its roster. The deal, for which Raycom paid $583 million, will close in December 2008.⁶ This was the second-largest television station sale of the year.

The largest was when News Corp., the owner of Fox Television, put nine of its small-market stations up for sale in June 2007. These were bought by the private equity firm Oak Hill Partners for $1.1 billion in December. (Oak Hill had bought the nine stations put up for sale by the New York Times in 2006.) Once the deal is complete, it will leave News Corp. with 26 owned-and-operated stations, down from 35. That decision freed up some money for News Corp., which acquired Dow Jones, publisher of the Wall Street Journal (see Newspaper Chapter).⁷

The sales were seen as an indication that television stations continue to be seen as valuable acquisitions, a trend expected to continue into 2008.

Other aspect of these sales are the amount of debt that station groups are taking on from the acquisitions and what impact this will have on them in the future.

Stations with more debt have less cash to put into their product to pay for syndicated programming, to build into their newscasts or to pay talent. It becomes a matter of simple math. In a competitive marketplace where one is fighting for market share of audience, even if the audience over all is declining, less money to put into the product can easily translate into lower ratings.

Case in point is Young Broadcasting, which put its San Francisco station KRON-TV up for sale in January 2008, and was aiming for a sale by March to make money in the first quarter of its fiscal year. It had bought the former NBC affiliate at a then-record $823 million in 2000, and some analysts thought it had overbid for the station, given that it was a small broadcasting group. The criticism bore fruit when KRON lost its NBC affiliation, became an independent station and soon dropped in ratings (which did not improve even after it became a MyNetwork affiliate in 2006). It was seen to be financial millstone for the parent company, and analysts did not expect it to make any profit at sale.⁸

The broadcaster, which owns just 10 stations in the country, is now financially strained. It made only about $230 million in revenues 2006, and said that it lost about $70 million during the first nine months of 2007.⁹ It cut staff and programming at its other stations, and trade magazines reported that it was trying to slash costs at the television stations by $20 million.¹⁰

The FCC Regulations

In 2008, new rules regarding ownership could fuel even more activity.

The reason is that late in 2007, Kevin Martin, the chairman of the Federal Communications Commission, made a sudden push to relax the rules forbidding companies from owning properties across mediums in the same market, the so-called cross-ownership ban.

Presenting what he called a compromise, Martin called for relaxing the ban on cross-ownership only in the top 20 markets. His plan gave companies, under certain conditions, the right to own both a newspaper and a television or radio station in those larger markets.¹¹

In doing so, Martin, despite protests and a divided vote, in the end succeeded in navigating some of the more controversial terrain in communications regulation.

The current rules, put into effect in 1975, prohibit the “common ownership of a full-service broadcast station and a daily newspaper when the station’s “contour” or service area encompasses the newspaper’s city of publication.”¹²

The last attempt to revise them, under former FCC Chairman Michael Powell in 2003, proved highly charged. Powell, whose deregulatory efforts went much farther than Martin’s, became a political lightening rod, and his plan ultimately was beaten both by political opposition and court order (also see last year's Report.)

Martin, Powell’s successor, took up the ownership issue again in June 2006, but at a leisurely pace. Six public hearings were scheduled, but a year later, only four had been held. In October 2007, however, Martin suddenly announced a fifth and last hearing, and scheduled it for December. He also called for just a one-month public comment period, compared to the traditional three-month period.

The reaction to his proposal was swift and deeply divided.

Those who backed Martin’s push for deregulation argued that the ban was created for an era when newspapers and television stations dominated news and information but was moot in an age of online news access.

The Newspaper Association of America, a trade organization representing newspaper companies, supported overhauling the rules and criticized Martin for not doing enough. It called for the rule to be relaxed in all markets, not just the top ones.

That is because, although local television will be affected by the rule change, the industry at the heart of this argument is newspapers. Faced with declining ad revenues and readership, the medium is seen as unable to compete with other media (see Newspaper Chapter.) In a New York Times op-ed, Martin contended that “newspapers [will] wither and die” if action is not taken and that his proposed “relatively minor loosening” of the rules will help “forestall the erosion in local news coverage by enabling companies that own both newspapers and broadcast stations to share some costs.”¹³

There also was equally strong opposition to relaxing the rules. According to the New York Times, the FCC received three million comments in opposition to changing the ownership rules in November 2007 alone.¹⁴ Activists and civil rights and labor groups, afraid their issues would get lost in the shuffle, wanted them included in cross-ownership deliberations.

Organizations as diverse as the Parents Television Council, the National Organization for Women and the National Rifle Association weighed in, arguing that the FCC was rushing in to help the media conglomerates at the expense of other important considerations, such as the chance of increasing minority ownership and assuring coverage of local events.

Opposition also came from within the FCC. Standing in Martin’s way were two Democratic FCC commissioners. While the three Republicans on the panel were in favor, Democrats Michael Copps and Jonathan Adelstein immediately voiced opposition. They argued that not only did the new proposal cover most of the country (more than 40% of television households), but that it also would encourage more waivers for markets outside the top 20.

Allowing dual ownership in certain markets could set a precedent in all markets, with companies asking for the relaxation of the rule everywhere. Or they could keep applying for waivers in specific markets, a practice the FCC frequently follows, making the restrictions ineffective.

In November, a group of Democrats, led by North Dakota Sen. Byron Dorgan, introduced a bill calling for a 90-day public comment on any FCC changes, which would have effectively prevented a vote on the media ownership bill until an unspecified date in 2008. Dorgan’s bill also called for a separate proceeding on the issue of localism. The bill was supported by leading Democrats, including presidential hopeful Barack Obama.¹⁵

On December 18, 2007, the commission voted 3-2 to lift the ban on owning both newspapers and TV stations in the top 20 markets. It also approved 42 waivers to companies that own both types of holdings in the other markets, the majority of which (36) had been exempt from the ban because their ownership predated the 1975 regulations.¹⁶

According to media reports, the vote was better positioned to withstand a court challenge or a congressional debate this time around, due to evolving media landscape in which fewer media companies are interested in keeping their newspaper holdings.

The lifting of the cross-ownership rule held special significance for the Tribune Company. It owns both newspapers and television stations in five markets, four of which are in the top 20, and has so far operated through FCC waivers.¹⁷

In early 2007, the Tribune Company was sold to Samuel Zell, a Chicago investor best known for his real estate activities, who hoped to have his purchase approved and completed so he could take the company private by December 31 to avoid financial penalties.

In late November, the FCC gave the company a permanent waiver for its properties in Chicago and two-year waivers to cover its other four markets, effective January 1, 2008. The waivers saved the newly formed company more than $100 million in compensation for the higher payments that would have been owed to shareholders to cover the rise in share price in 2008 (estimated to be 8 percent).¹⁸

Even with the ruling, the Tribune Company, hoping for permanent waivers for all markets, filed a notice of appeal challenging the FCC’s decision. According to the trade press, if Tribune loses its appeal, it still has the waivers. But if it wins, it could mean the cross-ownership rules as a whole get overthrown. The changes also affect other media companies, but to a lesser degree. Both News Corp. and Gannett benefit from the rule relaxation since they owned properties in the top markets, while Media General, which had four waivers for its properties in smaller markets, was given permanent waivers, much like Tribune.¹⁹

The Top Local TV Companies by Revenue

For now, and for the foreseeable future, the local TV industry continues to be dominated by familiar names, as least as of 2006, the last full year revenues are available.

If we look at the top parent companies that year, three media conglomerates led the local television industry. News Corp., which operates nationally through the Fox Television group, continues to earn the highest revenues in the television sector. General Electric follows with its NBC stations and the CBS Corp. (formed after it split from Viacom in 2006).

Top Local TV Parent Companies by Revenue
February 2008

Source: BIA Media Access Pro, February 21, 2008
Note: Companies ranked according to their 2006 revenues; *NBC/GE owns 10 NBC Television stations, one independent station and 16 Spanish-language stations through Telemundo.

Big Four Networks Dominate

When it comes to content, most U.S. television stations get programming from one of the Big Four networks -- ABC, CBS, Fox and NBC.

These four companies make revenues not just from the local stations they own and operate (called “O&O”s), but also from the affiliates to whom they supply programming.

They do not, however, necessarily own a large number of stations. Among the Big Four, Fox (News Corp.) owns the most stations, 35. (Fox entered into a deal to sell 9 of these stations, and when the deal is complete, will have 26 stations.) The CBS group had 29 stations. NBC and ABC are next with 10 each.²⁰ The big station owners are groups like Broadcasting Media (with 69 stations), Sinclair (58) and LIN TV (45).

According to the BIA financial network database, there were more than 800 local television station owners in 2007, and as stations get bought and sold, and private equity firms enter the market, the number of players who want to be part of the local TV business seems to see no signs of slowing down.

Footnotes

1. BIA Financial Network, “BIA Financial Network Reports $22.2 billion in 2007 TV Revenues; Predicts 11% growth in 2008 due to strong political year that will affect specific DMA markets,” BIA Press Release, January 10, 2008.

2. Mark Fratrik, “Five Reasons Why TV Stations Are a Good Buy,” BIA Perspectives (Newsletter), August 3, 2007.

3. Michael Malone, “Retransmission stalemate: no end in sight,” Broadcasting & Cable, December 10, 2007; Jon Hemmingway, “Sinclair Retransmission-Consent Deals Boost Q3 Revenue,” Broadcasting & Cable, October 31, 2007.

4.David Goetzl, “LIN TV: Builds Biz, Doesn’t Sell,” MediaPost, December 10, 2007.

5. Jon Hemingway, “Credit Crunch Slows Media Deals,” Broadcasting & Cable, August 8, 2007.

6. Andrew Edwards, “Lincoln Sells TV, Radio Stations for $683 million,” Wall Street Journal, November 12, 2007

7. Associated Press, “News Corp. says it plans to sell 9 Fox-affiliated TV stations,” International Herald Tribune, June 13, 2007; Michael Schneider, “Fox drops TV stations for Dow bid,” Variety, June 13, 2007

8. George Avalos, “KRON-TV puts itself up for sale,” San Jose Mercury News, January 10, 2008.

9. Chris Churchill, “Is TV Station on the Block?” Times Union ( Albany, N.Y.), February 5, 2008

10. Michael Malone, “Heavy Layoffs at Young Broadcasting,” Broadcasting & Cable, January 13, 2008.

11. Martin's proposal would allow a newspaper to own either a television station or radio station, but not both, in the same market. It would permit a newspaper to buy a television station only if the deal would leave at least eight other independently owned newspapers or television stations in the city. And it prohibits a newspaper from buying one of the top-four rated television stations in a city. It also states that there must be at least eight other “media voices” in the market as well. Frank Ahrens, “FCC Chief Offers New Plan on Cross-Ownership,” Washington Post, November 14, 2007. Also, Corey Boles, “FCC Plan on Media Ownership May Ease Tribune Deal,” Wall Street Journal, November 13, 2007.

12. The Newspaper/Broadcast Cross-Ownership Prohibition (1975); Online at: http://www.fcc.gov/cgb/consumerfacts/reviewrules.html.

13. Kevin J. Martin, “The Daily Show,” New York Times, November 13, 2007.

14. Stephen Labaton, “Few Friends for the Proposal on Media,” New York Times, November 13, 2007.

15. John Eggerton, “Dorgan, Obama, Other Sens. Move to Block FCC Media-Ownership Vote,” Broadcasting & Cable, November 8, 2007.

16. Amy Schatz and Corey Boles, “FCC Votes to End Media Ownership Rules,” Wall Street Journal, December 19, 2007; Frank Ahrens, “Divided FCC Enacts Rule of Media Ownership,” Washington Post, December 19, 2007.

17. If the rules are relaxed, the company could keep both newspaper and television holdings in its four top markets – Los Angeles, Chicago, New York and Miami – but would have to sell either its newspaper or television station in Hartford, Conn. See Jim Puzzanghera, “Bad reviews pile up for FCC chief’s plan,” Los Angeles Times, November 19, 2007.

18. Stephen Labaton, “Few Friends for the Proposal on Media,” New York Times, November 13, 2007.

19. Corey Boles, “FCC Grants 42 Waivers from Cross-Ownership Rule,” Free Press, December 17, 2007.

20. Station tally as of February 2008; See ABC, CBS, NBC and News Corp. Web sites for updated figures. Please note that stations numbers reflect the company’s holdings on the day we cull data, and may have changed by the date of publication of this report.

News Investment

By the Project for Excellence in Journalism

As digital transmission, the most talked-about form of which is HD TV, moves closer to reality, the bulk of investment in local television stations appears to be on technology rather than in people to gather the news.

Even as news directors reported no significant change in salaries for 2006, more than half reported increasing their budgets. Many of those dollars were put toward newer distribution platforms and getting ready for the mandated transition to digital.

News directors also reported airing more local news, as well as sharing their content with other platforms, most notably, their station Web sites.

TV News Budgets

The increase in budgets to accommodate the digital investment comes, according to most evidence, after years of holding steady or cutting back on newsroom budgets.

More than half of news directors across all market sizes report increasing their budgets, according to the latest survey conducted by Robert Papper for the Radio Television News Directors Association.¹

In 2006 (the latest year of data), 54% reported heftier newsroom budgets, a third (32%) saw no change and only 8% reported any decreases. This is a slightly more optimistic picture than the year before, when less than half of news directors (46%) reported increases and 12% saw budgets fall.

Responses also signal that unlike revenues, financial investment is spread out across stations and markets, not concentrated on the major players. The bigger variation comes in independent vs. affiliated stations. While most news directors across both groups reported budget increases (67% at independent and 57% at affiliated), more news directors of the independent or unaffiliated stations (33%) reported a decrease, while affiliated ones (30%) said budget levels had remained the same.

Where is the new money going? For the most part, newscasts and employees are being spread ever thinner, while the growing demands of the Web eat up any excess dollars in the budgets.

The Shift to Digital (HD) TV

One of the biggest areas of investment in the past few years has been in preparing for the mandatory switch to digital transmission, in the short-hand referred to as HD². On February 17, 2009, full-power television stations in the U.S. are scheduled to stop broadcasting on their current analog systems and switch to digital television as part of a federal policy introduced in 1996.³

Digital transmission means information is sent in encoded streams of data, rather than over radio waves, allowing for better quality, faster distribution and multiple digital channels in the same bandwidth that could previously hold just one analog channel. For televisions stations, this means multiple streams of data, and in many forms (audio, video or data). For example, a local television station could dedicate one stream to 24-hour local news, another to weather or sports and so on.

Newsrooms also are investing in new technology to do more with the same amount of people, and to meet the demands of a rapidly changing marketplace. New tools are needed to keep up with new distribution platforms and the transition to digital transmission.(See Online Trends.)

Editing and graphics tools are helping journalists automatically repurpose content for diverse platforms – television, Web sites, podcasts and hand-held devices – with minimal technical training.

Local stations are buying software programs that can edit, add graphics and configure content for many platforms in one go, promising digital-quality data without affecting the station’s workflow.

A live production technology company, Ross Video, has developed a software system called “OverDrive” that includes robotic cameras, tape decks and graphics devices that help a station quickly institute newscasts. The company had installed this system in 60 stations, including the NBC-owned stations, by October 2007, and another 15 to 20 are in the works.¹¹ Other software examples include Apple’s Final Cut Studio, Avid’s Active Content Manager and the Multi-Platform Suite developed Virzt, a graphics supplier.¹²

According to trade publications, a station in a mid-size market will spend about $5 million for the gear needed to switch to high-definition programming – an amount that might deter smaller stations but which is seen as an inevitable business cost to the stations that can afford it.

Large numbers have already switched or are in the process of switching to HD local programming. According to Broadcasting & Cable, more than 60 stations -- most owned by the Big Four networks or by the larger television groups -- produced local news in high definition programming in November 2007. By the end of 2008, all 39 CBS-owned- and-operated stations plan to be all-HD and Fox Television aims to move seven of its 26 stations to the new platform.¹³

Amount of News on Local TV 

One recent trend in local television has been to add the number of hours that stations air news.

If the audience for newscasts is declining, adding more daytime programming hours is a way to recapture those who might not be home during traditional news hours at night. That also is a way to add new revenue opportunities: If you cannot charge more for advertising when the ratings are down, or add more commercials into the programs you have, create new programs instead.

This year, we find that ratings for local news show no growth (see Audience) and that stations are adding newscasts at different times in the hopes of attracting viewers, something that might account for increasing hours.

The amount of local news aired in 2006 rose and indications are that it continued to rise in 2007. News directors of all local television stations who responded to the latest survey of the Radio Television News Directors Association reported airing an average of 4.1 hours of news on weekdays in 2006, up from 3.8 hours the year before.

Average Hours of News per Weekday

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

There is reason to believe the growth will continue. The majority of news directors (75%) at independent stations said they intended to add more news in 2007. And more than a third (37%) of their counterparts at the network affiliates planned to do the same.

Combined with the staffing figures, the implication of more hours of news seems a familiar one. According to the Papper data, the local television news industry is once again looking at a scenario in which the amount of news being produced is growing much faster than the number of people producing it. This stretching of resources suggests problems. It tends, according to PEJ’s earlier content work in local television, to translate into local newscasters relying more on syndicated material, non-local material, electronic press kits and anchor reads.¹⁴

Sharing Newscasts

One major change in local television is that of stations producing news for rival stations. According to estimates by Papper, about 200 stations around the country now get newscasts from other stations. The number was close to zero only a few years ago, Papper believes.

That trend continues to grow. In 2006, a third of all news directors (37%) said they share content with another local television station – up from 21% the year before.

The growth seems to be coming from the increase in content-sharing beyond the usual sources – that is, Big Four affiliates or stations that operate in the biggest markets.

At non-affiliated commercial stations, half of news directors (50%) said they had shared content in 2006, compared to none the year the before.

Also, more news directors in the smaller markets (beyond the top 25) reported sharing content than the previous year. In the smallest market block, more than double the number of news directors reported this increase – 18% in 2006, up from the 7% the year before.

Staff Size

Over all, the staffing in local newsrooms is fairly stable. The average staff per station fell slightly, to 35.8, about one person fewer than last year’s average (36.4.). But that number by itself may be slightly misleading. A big drop in mid-sized markets accounts for most of it. If one were to take the most typical staff size, or median, the number rose by two staffers in 2006.

Stations affiliated with the Big Four Networks mostly held steady, averaging 38.3 full-time staffers vs. 38.1 in 2005.

Staffing at independent stations, according to the data, jumped in 2006, but very few independent stations took part in the survey, making the figures more volatile than those for other station groups. The average increased more than 50% to 30.5 full-time staffers, up from 20 in 2005. It brings the average staff back in line with 2003 and 2004 and goes a long way to close the gap with affiliates. It is quite likely that the 2005 number was an anomaly.

Part-time staff in local newsrooms had a slight increase. News directors reported an average of 5.2 part-time employees in 2006 compared with 4.7 the year before.

Local TV Newsroom Staff Levels

1999-2006, Average Number of Full-Time Employees

Design Your Own Chart

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

The growth seems to have been more widespread among these stations than expected. Half (50%) of news directors at independent or unaffiliated stations increased staff in 2006, more than four times the number who had expected to the year before (12.5%). This seems to have overshadowed as well the fact that more news directors cut staff (25%) than had expected to (12.5%).

Changes in Staff Size
2006

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

For 2007, available predictions are that staffing will mostly hold steady. The majority (61%) of news directors plan no changes and only about 28% see an increase coming. Possibly more heartening for local news employees, only 5% plan cutbacks.

Salaries

If people are being asked to do more work, did it affect their pay? The answer, as it was the year before, is that local newsroom salaries in 2006 barely budged, rising less than a percent (0.6%), according to the television news directors survey. And a higher rate of inflation wiped out that minuscule gain. ¹⁵

Within the newsroom, the news director was best compensated, with a median salary of $74,000,¹⁶ slightly lower than the previous year’s $75,000. They were followed by anchors ($60,000) and executive producers ($52,000). Both positions saw a slight increase in median salary from the year before, when it was $58,500 and $49,500, respectively.

Following up on the 2005 trend, the average salary of a new hire (with no full-time experience) was $22,000 in 2006, a slight improvement over the $21,400 the year before.

Salaries over Time

Median Salaries, TV News, 2006 vs. 2005

Design Your Own Chart

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

In the past decade, news directors have consistently had the greatest increases in salary. The salaries have grown by almost half – 47% -- between 1996 and 2006 (in 1996, news directors reported a median salary of $50,500).

Next in the salary hierarchy are on-air positions (news anchors, sports anchors and weathercasters), which, taken together, have had a 45% increase. For other management positions – assistant news directors, managing editors, executive producers and news producers – salaries have risen 32%.

Even though long-term trends indicate growth in salaries, the pace is not what it used to be, according to the survey's author, Robert Papper. When seen against the cost of living and inflation, television newsroom salaries have not amounted to an increase in real wages.

News for Other Platforms

Local television stations routinely provide content to other platforms, as well – notably their own or other Web sites, local radio stations and local cable news channels. And news directors report that this cross-distribution shows no signs of slowing down.

Fully 80% of stations in 2006 reported posting their television content online, the same number as the year before. And half of all stations (49%) reported sharing content with local radio stations, a 5 percentage point increase over the 44% that did so in 2005.

At the bottom of the totem pole are cable channels, which had less than 15% of news directors reporting any shared content in 2006, about the same as the 14% of the year before. None of the non-affiliated stations reported sharing their content with cable channels.

Other Outlets Local TV News Stations Serve

2006, by Affiliation

Design Your Own Chart

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

Digital Transmission: A Primer

Digital and analog spectrums currently co-exist, but after the 2009 digital deadline, over-the-air television will only be available through the digital spectrum. Consumers who already own digital television sets will see no break in service, but for those with analog television sets, channels will go off the air. These consumers need either a digital television set or a converter box that enables their analog television sets to get digital channels.

According to the FCC, there were 40 million analog-only cable subscribers in 2007, or approximately 35% of all TV households.⁴ And according to federal statistics, 19% of households had over-the-air antenna reception in 2005.⁵ However, most do not know about the shift. In a poll conducted in January 2007, 61% of people who rely on broadcast TV were not even aware of the change to come.⁶ A year later, in January 2008, there was increased awareness but confusion about its impact. According to a survey by the National Association of Broadcasters (one of the industry lobbies with a stake in the transition), 79% of TV viewers had seen, read or heard something about the digital transition. However, another survey by Consumers Union found that of those who are aware of the switch, almost half (48%) thought that only digital television sets would work after 2009.⁷ Lawmakers and many civil rights groups are worried that it will come as a surprise to people in households with lower income.

Both the government and the broadcasters have been stepping up efforts to address these issues. To make the shift less costly to consumers, Congress allocated a $1.5 billion fund in 2005 to subsidize the price of the converter boxes. The National Telecommunications and Information Administration (NTIA) has been charged with administering the discounted rate program by issuing coupons for purchasing the boxes. Every television household can request two $40 coupons to purchase the analog-to-digital converter boxes.

And to educate the public about the switch and its impact, the National Association of Broadcasters launched a DTV education campaign, spending $697 million on public service announcements and advertisements.⁸ Beyond the technical ramifications, the switch – in the works for 11 years now -- has been the subject of much political and business debate. Despite their support, regulators and broadcasters have been at odds with the cable companies, which have many reservations over the timing, allocation of spectrum space and consequences of the shift.

One big bone of contention has been the issue of “digital must carry.” Under regulations enacted in 1992, cable operators “must carry” all local stations on their system, not just the local affiliates of the Big Four networks. To attract customers, many cable providers prefer to carry non-local programming, much of which is often produced by them or their corporate siblings. They have always felt tied down with the must-carry regulations, and now with the switch to Digital TV, they are even more worried.

Digital must carry, also known as “dual must carry,” would require that cable providers carry both the analog and digital transmission of the local stations. Many small independent cable television networks, which will automatically be bumped off digital cable if the regulation were to take effect, have joined the cable companies to protest the regulation. The broadcasters, on the other hand, want six digital streams for each station.⁹

In September 2007, the FCC mandated that the cable companies must carry both streams of the channel for three years after February 2009.¹⁰

Footnotes

1. The survey polled 974 television stations in the last quarter of 2006. Robert Papper, “News, Staffing & Profitability,” RTNDA Communicator, October 2007, P.29. The universe of news directors is smaller, as is the number of stations that originate news.

2. HD technically stands for "high definition" as opposed to "standard definition" or SD. Both refer to digital transmission, but HD offers better quality picture, and is the more popular selling point for consumers.

3. The analog spectrum will revert back to the government in 2009, which hopes to use it for public safety applications or auction it to wireless services companies. For more information, see www.dtv.gov, the FCC’s official Web site on the shift to digital TV.

4. Michele Greppi, “FCC Ruling Keeps Local Broadcast Stations on Analog Cable after Digital Transition,” September 12, 2007

5. Jim Puzzanghera, “Millions may miss the digital TV deadline,” Los Angeles Times, March 28, 2007.

6. Ibid.

7. Brooks Boliek, “Digital TV divide in the air,” Hollywood Reporter, January 31, 2008.

8. John Eggerton, “DTV-Education Campaign Values at $697M: NAB,” Broadcasting & Cable, October 15, 2007.

9. John Eggerton, “Stations, Cable ‘Dual’ Over Carriage,” Broadcasting & Cable, September 10, 2007.

10. It does allow cable operators that have fewer subscribers or less bandwidth to get a waiver from this rule. Michele Greppi, “FCC Ruling Keeps Local Broadcast Stations on Analog Cable after Digital Transition,” September 12, 2007.

11. Glen Dickson and Robin Berger, “In News, Money Talks,” Broadcasting & Cable, August 13, 2007.

12. See Glen Dickson, “Newsrooms Go Multiplatform,” Broadcasting & Cable, March 26, 2007.

13. See list in Michael Malone, “Stations Battle for Best Picture,” Broadcasting & Cable, November 26, 2007.

14. See PEJ’s Local TV News Projects, 1998 – 2002 (http://www.journalism.org/ra_by_media/55/61/%2A?page=1) and other Local TV studies on Journalism.org

15. Robert Papper, “Seize the Pay,” RTNDA Communicator, June 2007, P. 18.

16. Because the big stations in the top markets can raise the average salaries out of proportion, the median salary is a better measure of typical newsroom salaries.

Online Trends

By the Project for Excellence in Journalism

All indications are that local television, challenged now by cable, satellite and mobile devices, is beginning to take the Internet more seriously.

What does it have to compete effectively in the new platforms? The answer being offered by the industry is local content.

Viewers and advertisers may be lured away from traditional broadcast by compelling gadgets, the thinking goes, but local stations have the crowd-pleasers -- weather, news, sports and traffic -- and are increasingly reformatting them for newer platforms.

The Internet

The evidence that the industry is moving more seriously to the Web is more than anecdotal now. For the second year in a row, the survey by Robert Papper of news directors found that nearly all stations have Web sites. In the last quarter of 2006, the survey found that 97% of local television stations have their own Web sites and virtually all of these (98%) include local news.¹

And they continue to add more staff. According to the latest survey of local station Web sites, news directors had in 2006, on average, about four newsroom staffers dedicated to their station Web sites, with two working full time.² This is about half a person more than they h