Analyst: Local TV Advertising to See 2% Rise in 2018

NEW YORK — Traditional local TV advertising is estimated to see a 2-percent jump in revenue next year, said Marci Ryvicker, media analyst at Wells Fargo.

And while Ryvicker said that rise excludes political ads, she expects broadcast stocks will get a boost from the Federal Communications Commission’s (FCC) easing of media ownership restrictions that will lead to further consolidation of the industry. 

Speaking at the TVB Forward Conference, she also said the volatility in local broadcast stocks should stabilize in 2018 and outperform not only other sectors of the media, but the general market.

Ryvicker said she believes recent volatility came from forces beyond control of broadcasters and misunderstanding industry trends. Yes, spot sales are soft, but it’s becoming a smaller and smaller part of the industry’s revenue pie, she said. What’s getting bigger is net retrans (retransmission consent revenue less reverse comp) — and there the news is good.

Specifically, Ryvicker said stocks — led by Nexstar, Sinclair, and Gray — will benefit from the surge of advertising from heavy TV electioneering and around the Olympics on NBC.

“Scale is really important,” if it is the right scale, she said. “It’s not just getting bigger to get bigger. It’s getting bigger in markets where you really have control and you can really sell your advertising, solidify you relationship with the networks, and solidify your relationships with the MVPDs.”

Ryvicker also said broadcast stocks have asuffered because they get lumped in with other TV media sectors. When MVPDs report declines in subscribership, investors tend to punish broadcast stocks, as well.

She added that many of the lost MVPD subscribers are being replaced by subscribers to vMVPDs — over-the-top (OTT) streaming services like DirecTV Now and Sony’s PlayStation Vue — and network affiliate TV stations are must-haves on such services. “OTT is going to be very good for the must-haves and broadcasting is one of them,” she said.