U. S. Station Bankruptcies Threaten Balance and Industry
by Doug Sheer on 05/17/10
Truth be told, no definitive numbers exist, but there are rumored to be as many as 300 smaller and group owned TV stations in one stage or another of bankruptcy in the U. S. and more than a few broadcast or cable networks close to that point. This brings into question several issues. The first, the balance of power in a democracy and the ability of locally-owned stations to have their political voices be heard. And, secondly, the affect on their buying power -- or lack thereof -- and how that may impact equipment manufacturers, service providers and banks.
The Congress established and the F. C. C. mandated, that there be a delicate balance between groups, networks and individual stations (many 'family owned'), and restrictions on cross-ownership of radio, print and TV in local markets, in order to assure that there be a democratic distribution and fairness in the source of news that citizens got. If enough of the local and group stations fail or change hands the system could break down.
As far back as a decade ago, when I was the monthly financial and industry trends columnist for Television Broadcast magazine, one of many of my past part-time hats, and became aware of the, then, enormous stress that so many stations were under faced with having to heavily leverage themselves in order to transition to Digital. The cost of Digital transmitters, towers and antennas as well as associated equipment was forcing them to abandon plans to purchase other gear and putting them in a defensive position. Although there are clear signs of a strong recovery, that rebounding could be dampened if more stations file and certainly if they completely fail or close down.
Our data shows that the decline in advertising revenue that caused the failures has abated and is already rebounding. But, the biggest beneficiaries to date have been the networks while local stations have yet to see much help.
This trend, if we can call it that, will likely slow this year, but in the meantime, a delicate balance of long standing has become fragile and we should care.
