Study: TV station revenue will rebound

Should increase 5.2% to $18.5 bil in 2010

Following a record 17% drop in TV station revenue this year to $17.6 billion, station fortunes will turn, with revenue increasing 5.2% in 2010 to $18.5 billion, according to a SNL Kagan study released Tuesday.

The "TV Station Deals & Finance" study predicts that over a 10-year period, TV station revenue will have experienced a compound annual decline of 3.5%.

However, the growth story for TV stations lies in building additional revenue streams through retransmission-consent fees and digital media. Retransmission-consent revenue hit $500 million last year and is forecast to grow to $739 million this year and on track to cross the $1 billion milestone by 2011, according to Kagan. Online revenue also is growing and will reach $1 billion by 2012.

"Nontraditional revenue has helped to offset some of the revenue softness resulting from the economic downturn," said Robin Flynn, analyst for SNL Kagan. "In particular, retransmission-fee revenue has proved to be a high-growth, high-margin revenue stream for TV station owners."

The station deal market also has been soft since last year, thwarted by a lack of finance and a sinking ad market. Last year, the average deal price reached an 18-year low. Through the first half of the year, 114 stations sold for $550 million, but the majority were senior-lender takeovers in debt-for-equity swaps.

"Things could begin to improve in 2010 as a pent-up supply of stations comes to market," Flynn said. "Leading TV station properties in attractive markets continue to be highly sought-after assets," she added.