The Desk appreciates the support of readers who purchase products or services through links on our website. Learn more...

Mergers helped local stations stave off coronavirus business woes, report says

Consolidation coupled with a focus on retransmission agreements have helped local stations weather the economic effects of the COVID-19 pandemic.

Consolidation coupled with a focus on retransmission agreements have helped local stations weather the economic effects of the COVID-19 pandemic.

(Photo: Pixabay, Graphic: The Desk)

Local television station owners have seen a dramatic dip in revenue from advertisements, but their sheer scale thanks to a combination of mergers and acquisitions means they may be too big to financially fail.

That’s the sentiment of a report from S&P Global, a financial analytics firm that surveyed the health of several large local television station owners across the United States.

Large local station owners have seen revenue dip as businesses pulled back on advertising during the coronavirus pandemic. But S&P says a pre-pandemic trend of consolidation among media properties coupled with a focus on companies raising revenue through long-term re-transmission agreements with cable, satellite and streaming operators have helped keep local TV station companies afloat during the crisis.

Local owners felt a “sting” when the coronavirus forced businesses like restaurant groups and car dealerships to modify operations or otherwise close at the start of the COVID-19 pandemic, which forced many businesses to reduce ad spending or pull campaigns completely until the dust settled.

Things started to recover for large local TV station owners around April, S&P said, though operations have yet to fully recover to where things were before the pandemic.

The S&P analysis examined the financial reports of Gray Television, TEGNA, E.W. Scripps Company, Nexstar Media and Sinclair Broadcast Group. Collectively, the five companies own more broadcast stations than anyone else in the country, with Nexstar Media emerging as the leader of the pack with nearly 200 local television stations across America under its control.

Those stations are hoping to see a bounce in ad revenue as political campaigns spend more money to reach voters during this year’s election cycle. Some local TV executives say they’re anticipating an increase in spending across stations because in-person campaign fundraiser events are not possible due to coronavirus-related restrictions.

That optimism is combined with data that shows local news viewership has increased across the board since the start of the coronavirus pandemic — data points that could help stations raise much-needed revenue when advertisers are ready to open their wallets again.

But the uptick in ad spending may not be enough to fully cover station losses. During a conference call with investors, Sinclair’s financial executive Lucy Rutishauser said the company still expects ad revenue to be down between 15 and 22 percent in the third quarter, S&P said.

Photo of author

About the Author:

Matthew Keys

Matthew Keys is an award-winning journalist with more than 10 years of experience covering the business of television and radio broadcasting, streaming services and the overall media industry. In addition to his work as publisher of The Desk, Matthew contributes regularly to StreamTV Insider and KnowTechie, and has worked for several well-known news organizations, including Thomson Reuters, McNaughton Newspapers, Grasswire, Comstock's magazine, KTXL-TV and KGO-TV. Matthew is a member of IRE, a trade organization for investigative reporters and editors, and is based in Northern California.

Email: [email protected] | Signal: 530-507-8380