Recession Woes Cause 3Q 2008 Long-Form Media Billings a 12.5-Percent Demise1 Jan, 2009 By: Shay Moftakhar Response
Top-30 spending skyrockets as the average cost of a half-hour block falls below $580.
The Devil's Magnum
All of 3Q 2008's losses were divided between national cable and broadcast. National cable had an 8-percent loss of $11.9 million, while broadcast suffered a 19.4-percent drop of $26.9 million. Satellite managed to advance $1 million for a 6.6-percent gain.
The total number of timeslots purchased on national cable declined by 5,720 slots — a big turnaround compared to 3Q 2007's 72,506 increase — reducing its market share by 0.1 percent. Broadcast suffered a 7-percent decline of 20,868 slots, losing 2.5 points of market share in the process. Only satellite showed growth, with a 33.6-percent gain of 10,096 slots, increasing its market share to 8.8 percent.
The average cost of a half-hour block of time fell to a new record low of $579.09. This is 9.3 percent below 3Q 2007 results and 6.6 percent below 2Q 2008's all-time record low of $619.73. Comparing costs and timeslots to 3Q 2005 results shows that the drop in the average cost of a half-hour block of time directly correlates to 95 percent of the $38 million decline in total spending.
Spending in the top 30 markets also rebounded in the third quarter. Overall spending in the top 30 markets grew by $53.1 million, up 38.3 percent, compared to 3Q 2007's 4.6-percent decline of $6.8 million. During the previous third quarter, the top 30 markets accounted for 45.9 percent of total spending, while this year, those same markets represented a mighty 72.5 percent. The top 10 markets surged ahead $20 million — a 33.8-percent increase — while markets 11-20 grew $16.7 million and markets 21-30 gained $16.5 million.
How Low Can It Go?
It's official: the United States is in a full-blown recession. Even though this industry has flourished through past recent recessions, this time it may be different. The housing bubble also fueled the spending bubble, and everywhere we look, there is not one indicator to give hope for a quick turnaround. Optimists say one year, while the cynical say five.
Worse yet is the threat of stagflation, as prices for consumer goods and travel have not reset after a recent drop in fuel prices, severely hurting 2008's holiday shopping and travel season. There is the possibility of a massive shake-up in the infomercial industry within the next 24 months, let alone the entire economy. Long-form DRTV spending may fall below $1 billion per year, perhaps to late 1990s levels.
Yes, it's 1981 with a splash of 1992 all over again. Welcome to 2009.