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2021 Outlook: Challenges, opportunities facing US TV, radio stations


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2021 Outlook: Challenges, opportunities facing US TV, radio stations

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The U.S. broadcast station industry, with record 2020 political revenue behind it, has a transitional year ahead. While core ad revenues are improving in the first quarter of 2021, it is not the snapback many had hoped for, with the vaccine rollout slowed by supply issues and another round of stimulus still being debated in Congress. The Federal Communications Commission will also be going through a political shift with a new commissioner and Democratic majority, and the prospects of ownership cap relaxation for broadcasters may diminish.

Opportunities for broadcasters to boost revenues and relevance include Next Gen TV, new diginets, and broadcast over-the-top launches for TV and digital streaming. Radio station podcasting initiatives could spark new revenue streams. However, major challenges could compress the sector's sales and margins. National and local spot advertising budgets may move further away from legacy media to digital alternatives. Distribution fee revenue growth from traditional multichannel retrans fees could also slow as more virtual, subscription video-on-demand and over-the-top options emerge.

Radio's debt overhang lessened in 2019 with successful Chapter 11 debt-for-equity restructurings at iHeartMedia Inc. and Cumulus Media Inc., both of which returned to the public markets. However, already this year Alpha Media Communications Inc., one of the largest privately held radio groups, filed its reorganization plan in bankruptcy court on Jan. 25, with 2020 revenues off by double digits.

There are signs of radio revenues stabilizing, with digital initiatives benefiting the bottom line. Beasley Broadcast Group Inc. reporting Feb. 10 that overall fourth-quarter 2020 revenues were down only 5%, a substantial improvement compared to respective second- and third-quarter declines of 53.7% and 24.9%. Besides about $10.2 million in political during the quarter, Beasley reported that digital revenues rose 7.6% year over year and accounted for 10.6% of total fourth-quarter revenue, up from 9.2% in the comparable year-ago period. In addition, Entercom Communications Corp. on Feb. 10 announced a local sports podcasting partnership deal with TEGNA Inc. that could prefigure more content collaborations between local TV and radio station owners.

Challenges and opportunities facing broadcast stations today:

National advertising

U.S. broadcasters' national core spot advertising, excluding political, was down 40% or more during the first wave of COVID-19-related shutdowns in the second quarter of 2020. Core ad trends started to improve in the third quarter with the return of live sports, the reopening of local businesses and the boost in viewership from local news and election coverage. National core spot advertising continued to strengthen in the fourth quarter as the auto and retail categories started recovering. National core ad revenues in 2021 should be up by low to mid-single digits, although the big question for NBC (US) and Telemundo (US) affiliates is whether the Summer Olympics in Tokyo will proceed as scheduled from July 23 to Aug. 8.

Political advertising

Record-breaking political advertising in 2020 is estimated to have reached about $4 billion — about $1 billion more than the $3.05 billion we had projected early in the year — boosted by factors including the unexpected surge in political ad spending surrounding the Georgia Senate runoff elections in December. There is already talk that the 2022 midterms could also break political ad spending records, given the slim margin for Democrats in the House of Representatives and a 50-50 tie in the Senate.

Local advertising

One major advantage broadcasters continue to hold against their digital rivals is the ability to serve and build trust with communities, including through local news. That role has become even more apparent during the pandemic, when updates on infection rates, school reopenings and vaccine rollouts are top priorities. Over-the-air, or OTA, households have been growing as consumers who tighten budgets and cancel pay TV subscriptions during the pandemic opt for OTA access to essential local news. We expect local advertising to deliver mid- to high single-digit growth in 2021, with small and midsized markets likely outperforming large markets and urban centers with high COVID-19 infection rates, as it will take longer to vaccinate their populations.

TV ratings

Local TV station ratings, measured by Comscore Inc.witnessed a significant bump in average household viewership in the second quarter of 2020 as viewers followed the unfolding COVID-19 crisis. Ratings dipped in the third quarter with the dearth of live sports and new prime-time content, then bounced back in the fourth quarter with the return of football.

However, ViacomCBS Inc.'s CBS (US) broadcast of Super Bowl LV on Feb. 7, 2021, recorded the lowest audience since 2007, likely due to restrictions on large social gatherings and on fans at the game.


Retrans negotiations with traditional multichannel providers remained contentious in 2020 and the start of 2021, highlighted by the Nexstar Media Group Inc./DISH Network Corporation and TEGNA Inc./AT&T Inc. retrans disputes that impacted a combined 12.6 million subs. In 2020, a total of eight major retrans disputes occurred, covering 364 stations and 22.2 million subs. However, these retrans disruptions averaged 34 days, significantly fewer than the 171 days averaged in 2019.


ATSC 3.0 or Next Gen TV is both an opportunity and challenge for TV stations. They must show why their platform is better than 5G, which is getting more national press and offers consumers a compelling reason to upgrade their TVs and connected devices. Pearl TV, the business organization of broadcast companies backing Next Gen TV, expects the platform's implementation to ramp up this year from 80 live stations in 20 cities as of Jan. 7 to 20 more cities by the end of summer, with a target of reaching more than half of Americans by fall 2021.

Other digital initiatives, such as Sinclair Broadcast Group Inc.'s STIRR and E.W. Scripps Co.'s Newsy OTT platforms and podcasting for radio, are intriguing and have started to show actual results in the form of growing audiences and incremental revenues.

Deal market

Many industry professionals continue to consider current broadcast ownership caps outdated. Some of these rules are decades old, predating the rise and unfettered reach of digital and social media companies — direct competitors for advertising and subscription dollars. A National Association of Broadcasters proposal on radio station ownership cap relaxation would allow up to eight FMs in the top 75 markets, with no AM cap and no cap at all outside of the top 75 markets. For TV, there is a push to lift the 39% national ownership cap and allow owning two Big Fours in all markets. However, both these proposals were unsuccessful during four years of a Republican-led FCC and are less likely to change under a new Democratic-led FCC.

Total U.S. broadcast deal volume in 2020 reached $1.02 billion, excluding the Univision Holdings Inc. 64% equity stake acquired by Searchlight Capital Partners LP and ForgeLight LLC. This marks the lowest deal volume since 2010's $810 million. All the major deals of 2020 were in the TV sector, including E.W. Scripps Co.'s acquisition of ION Media Holdings Inc., which we valued at $338.0 million for the 71 full-power TV stations. Mission Broadcasting Inc. followed with its $75 million deal for WPIX-TV in New York, which will be operated by Nexstar. 

Even without significant deregulation, more TV sector M&A is expected in 2021 as the consolidation drive continues. Gray Television Inc.'s $925 million deal for Quincy Media Inc, announced Feb. 1, marks the latest example. There is also the question of renewed takeover bids for TEGNA Inc., which were unsuccessful in early 2020 in part due to the uncertainty of economic conditions at the beginning of the pandemic and a sharp drop in equity values.

In radio, iHeartMedia and Cumulus Media might look to trim their portfolios or swap out of underperforming markets. There could be additional debt-for-equity swaps and distressed sales among overleveraged station owners if radio revenues continue to decline sharply in 2021.

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