Local TV Economics

While local stations made money in 2004, how much was the newsroom contributing to the growth? According to data, not as much as it used to. The latest results, such as those of the Radio-Television News Directors Association (RTNDA/BSU) survey, presented a cautious economic picture for local news in 2004.13

The survey found that the amount newsrooms contribute to total revenue saw roughly a three percentage-point decline in 2004. For the year, news accounted for 42.8% of station revenue, down from 46.1% the year before.14

Percentage of Station Revenue Produced by News

2002 - 2004, All Stations

Source: RTNDA/Ball State University Surveys. Based on survey responses of news directors

According to the survey, news divisions in the top 25 markets contribute less of total revenue than those in smaller markets. That is slightly deceiving, however. Most of the difference might be coming from the independent stations in the top 25 markets that produce news, including Spanish-language stations. While there are no hard data to support that, it is worth considering that their contribution would be much smaller than that of the stations affiliated with the four top networks.

The most striking finding of the survey was that “news profitability” (i.e., newscasts that were making a profit) hit an all-time low in 2004. The report showed that the number of news directors reporting a profit fell by almost 14 percentage points from the previous year. Of the 1,223 stations that participated in the survey, only 44.5% of the news directors reported that they earned a profit. This was down from 58.4% from the year before.

Local TV News Profitability

All Stations, 1996 - 2004

Design Your Own Chart

Source: RTNDA/Ball State University Surveys

Based on survey responses of news directors

The percentage of profitable newsrooms began to decline after 1997, when two thirds of news directors said they were showing a profit. By 2001 and 2002, just over half were doing so. On the other hand, comparing 2004 with the last eight years, there’s been a jump of approximately 21% in the number of stations that say they are losing money. Indeed, the number of news directors reporting a loss in 2004 was the highest the survey has ever recorded, at 12.1% (the previous high was 11.2% in 2002).15

The differences in profitability between the network affiliates are striking. Over the last two years, the highest percentage of stations reporting a profit were those affiliated to the Fox Network. The percentage rose from 63% in 2003 to 67% in 2004. ABC affiliates, on the other hand, were the least likely to show a profit, down to 44.1% from 64.9% in 2003. ABC’s numbers seem to be a reflection of its poor performance during prime time (see Network TV Audience). But the past two years have been a difficult time for local news in general, with a number of local newscasts being canceled because they failed to build a sufficient audience.16 The Sinclair Group, one of the largest TV station groups in the U.S., seemed to be getting out of the news business in 2005. It shut down news operations in Birmingham, Pittsburgh and Milwaukee, and there were reports that it might do the same in other cities.17

If we look at profitability by market size, the largest and the smallest markets seem to perform similarly, with a third of each reporting profits. The markets in the middle were more profitable. But again, independent stations and/or Spanish-language stations tend to be concentrated in the large populations centers. Separating their results from those of the four big networks’ affiliates would dramatically change the numbers. It could also account for the anomalous fact that the top 25 markets show a profit rate lower than the smaller markets.

Newsroom Profitability by Market Size

2003 vs. 2004, All Percentages

Source: RTNDA/Ball State University Surveys. Based on survey responses of news directors