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WSJ: Local Stations' Cutbacks May Be Tip of Iceberg: "Major Cuts" Ahead to Stay Alive

Disturbing Interactive WSJ Interactive Graphic

Disturbing Interactive WSJ Interactive Graphic

The financial model that made local television a money-printing machine and made local GMs the toast of affiliate gatherings with network execs eager to impress appears to be dead or dying, with a "fuzzy future" on the horizon, according to a bleak report in this morning's Wall Street Journal:  "Now, with their viewership in decline and ad revenue on a downward spiral, many local TV stations face the prospect of being cut out of the picture. Executives at some major networks are beginning to talk about an option that once would have been unthinkable: eventually taking shows straight to cable, where networks can take in a steady stream of subscriber fees even in an advertising slump."
According to WSJ, local station ad revenue is projected to fall 20%-30% in 2009, and last week Walt Disney Co. "reported a 60% slide in operating income in its broadcast segment, including ABC and 10 ABC-owned stations, for the quarter ended December 31st, in part because of a 15% drop in revenue at its TV stations."  FOX owner News Corp reported staggering losses last week, and indicated its 17 stations would undergo "major cost-cutting in the coming 12 months" after a 30% decline in ad revenue.
WSJ Chart

WSJ Chart

The once booze and party fueled relationship between local station and network seems to be chilly at best, and local news isn't exactly flooding stations with dollars to make up the difference.  The WSJ predicts fewer stations will be doing news at all in the next few years, driven out of the marketplace because there's just too much product out there:  "Stations have pulled the plug entirely on some news shows in Lexington, Ky., and Yakima, Wash. In November, some stations owned by News Corp. and NBC Universal said they would begin pooling their newsgathering resources.


Station owners say even with these cuts, there are more local newscasts than the market can bear. "Over time, there will be fewer players," says Dunia Shive, chief executive of Belo Corp., which owns 20 local stations covering 14% of the U.S. market."

The article is not easy reading, but mandatory nonetheless.  The entire piece can be found here.

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  1. Just read the article. Very scary prospects indeed.

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