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Monday, February, 18 2013

For TV stations, a booming Q4…with help from retrans

By: Stewart Schley Monday, February, 18 2013

Cable’s biggest local TV advertising rivals racked up strong revenue gains in Q4 thanks to three primary revenue drivers, one of which happens to be the cable companies themselves.

Advertising revenues from political candidates and campaigns were the biggest contributors to a booming quarter for local TV station owners, with automotive gains and contributions from retransmission deals also kicking in nicely. Year-over-year revenue gains from local station operations for the final three months of 2012 ranged from 14% ( Belo Corp .) to an acquisition-aided 58.8% for Sinclair Broadcast Group . Station owners warn they won’t see those kinds of increases repeat in the 2013 off-year for elections, but in earnings calls over the last two weeks, there has been much rejoicing. Sinclair President and David Smith, for example, called 2012 “a remarkable year,” noting the company recorded record levels of political advertising while seeing a rebound in the automotive advertising category.

Most TV station revenue still comes from local and national spot advertisers. But in quarterly earnings reports and conference calls, station group executives also pointed to retransmission revenues from cable and satellite companies as a rising contributor. For Media General, the biggest percentage increase in Q4 revenue came from cable/satellite retrans revenues, which shot up 85% to $9.9 million as a result of late-year contract renewals. That compares to a gain of 5.4% in local advertising time sales (to $50.7 million) and a 1.4% rise in national spot advertising sales, to $25.2 million. also cited a “double-digit” increase in retrans revenue.

Even so, the local cable advertising category held its own in Q4 without the help of retrans income. Comcast reported Q4 advertising sales revenue was up 19.4%, and Time Warner Cable said its Q4 advertising revenue rose 29%, thanks mainly to the political spending injection.

If there’s a bright spot in the Q4 broadcaster reports for cable, it’s the resurgence of the automotive category that makes up the largest non-political local advertising account segment for television. Q4 automotive spending rose 21% for Media General, 10% for Meredith Corp. and 6.4% for Sinclair. Belo also pointed to “continued strength in the automotive category” as a revenue driver in the final three months of 2012.

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