(Hank Price)

I believe we are entering a new phase of local television.

When the 1991 recession ended, it took local TV about 18 months to return to previous levels of profitability. Recovery was across the board. National advertising initially bounced back, but by 2000 national was in a long term decline that continues through today. Growth in local advertising made up the difference.

This time recovery will likely be mixed, with leading news stations doing quite well.

Many higher rated stations already have most of their local advertisers back - though at much lower levels. As we enter 2010, political advertising, Winter Olympics and Superbowl should push up rates for traditional affiliates. Since non-news stations rarely receive political advertising, look for marginal news operations to try and hang on through November of 2010.

As stations begin to find their footing, changes in ownership will become a major issue. Pricing is currently in disarray with no agreement on multiples. As I'm sure you know, KRON in San Francisco failed to receive any minimum bids last month. In 1999 Young purchased KRON for a record $823 million.

Of course KRON went from NBC affiliate to independent, but still, the drop in value is far more than anyone expected.

Also, we must keep in mind the era of acquiring stations by issuing stock is over. Future transactions will be for cash. Will future owners be media companies, or will they be private equity firms? We like to think media centric companies will have a product advantage, but no one really knows. Who will invent the new business models? What will leading local brands look like? It will likely be a wild and fascinating ride.


By Hank Price (hprice@hearst.com)
Hank Price is Senior Director/Television of the Media Management Center. This post was prompted by a column in BusinessWeek by Jon Fine called The Big Bounceback? Local TV. Other commentary can be found here.