The U.S. broadcast station industry, including radio and TV stations, generated $48.29?billion in total revenue in 2017, with $30.68?billion from TV stations, including national and local spot, political, digital/online and retrans; and $17.62?billion from radio stations, including network, national and local spot, digital and off-air.
Click here for Kagan's "Radio/TV Station Annual Outlook," 2018 edition, in PDF, Excel and PowerPoint summary.
In the five-year outlook, TV station ad revenue is projected to grow at a 0.2% compound annual rate from 2018 to 2023. TV station ad revenues in 2018 are expected to increase to $23.01?billion, with midterm political swing-state markets outpacing the national average. Overall, we estimate TV station ad revenues in 2017 to have dipped to $21.30?billion from $22.86?billion in 2016, as increases in digital and online ad revenue failed to make up for softness in national advertising and the lack of political revenues. In 2017, TV station total revenues, including retrans, were down 1% to $30.68?billion as revenue totals were without the support of political advertising in an off-election, odd-numbered year.
Based on past patterns, we believe political revenue for broadcast TV stations will grow to $2.81?billion by presidential election year 2020. Our projections take into account the fluctuations between even/election and odd/nonelection years and call for $2.53?billion in total annual political advertising in midterm election year 2018, up 6.5% from $2.42?billion spent in the 2014 midterms.
The digital tactic of targeting voters in states and regions with the maximum impact has helped eliminate frivolous spending on TV and may shift more of the total share of political campaigns toward digital ads moving forward. However, TV still receives the largest share of political ad revenue. Political campaigns and political action committees are starting earlier — some in the year prior to the election — which has increased our expectations for nonelection odd years from prior estimates.
Going forward, while political ads will remain a key driver, the TV station industry should become less reliant on the traditional spot-ad marketplace. Growing revenues from retrans fees and more emphasis on digital revenue through web entities and virtual service providers will likely help smooth out the highs and lows of the political election cycle.
According to our latest projections, national and local spot ad revenues including political should continue to decline, falling from 94% of total TV station revenue in 2007 to 62% in 2017 and 59% in 2022, while retrans revenues rise from just over 1% of industry revenue in 2007 to 30% in 2017 and 33% by 2022.
For 2018, Kagan estimates total TV station revenues including retrans will be up 8% to $33.18?billion, boosted by $2.53?billion in expected midterm political ad revenue and high single-digit growth rates for retrans and digital/online revenue.
Over the projections period, TV station industry revenue is expected to grow to a high of $36.42?billion in midterm election year 2022, including $2.67?billion in political, $11.89?billion in retrans and $3.18?billion in digital/online revenue.
The radio station business, without the help of political ad revenue, decreased 0.4% in 2017, with over-the-air ad revenue shrinking 2.6%, excluding digital, nonspot and network. In 2018, we project an overall revenue increase of 1.1% to $17.82?billion from $17.62?billion in 2017, with digital and off-air sales buttressing declines in national and local advertising. In 2019, a nonelection year, we expect total revenues to decrease 0.1% to $17.84?billion, despite improving core ad spot revenue and digital growth.
We project digital gains of 6.5% for the radio industry overall, as that revenue stream rises to $1.27?billion compared to $1.19?billion in 2017 and $1.11?billion in 2016. Off-air has continued to be a solid segment for the industry, and we think that will continue this year with a 6.0% gain to $2.54?billion. National station ad revenues are expected to decline 2.8%, as the weakness carries over from 2017 with iHeartMedia Inc. and Cumulus Media Inc. going through capital restructuring and cost-cutting plans, while another top three radio group, Entercom Communications Corp., retools and creates a national ad platform with the addition of CBS Radio Stations Inc.
Kagan's long-term outlook for the radio station industry calls for revenues to grow slightly to $17.84?billion in 2019, to $18.05?billion in 2020 and then to $19.03?billion by 2028, an average annual growth rate of just 0.7%. Growth in the digital and off-air segments is projected to supplement national ad revenue declines, with moderate upticks in political years for network and local ad sales.
Over the 10-year projections period, we expect digital to increase its share of total radio station revenue from 7.1% in 2018 to 9.7% by 2028, while radio's share of total U.S. ad market revenue declines from 6.2% in 2018 to 5.4% in 2027.
In this report, we present five-year revenue projections for each of the 210 Nielsen U.S. TV Designated Market Areas, or DMAs®, and 268 Nielsen Audio rated radio markets (as of spring 2018). Our market-by-market projections use multiple factors to calculate growth rates.
For television, these factors include household growth rates in each of the television market areas, provided by Nielsen; estimates for political revenue, Olympic Games and World Cup viewership; overall U.S. demographic and consumer trends; additional ad revenue opportunities through digital multicasting and station streaming, mobile initiatives, and changes in local economic factors.
For radio, individual market outlooks incorporate estimated population growth in each core-based statistical area, provided by Nielsen, because these areas better represent the separate radio markets. Estimates also reflect economic factors, traditional advertising spending shifting to online and mobile, as well as recent radio listenership trends. Median household effective buying income growth, total employed civilian population 16+ growth and other economic statistics from Nielsen are also used in making these projections, as is information from individual broadcasters when available. Additionally, both television and radio revenues are in part based on Kagan's revised 10-year projections for TV and radio as of May 2018.
The market revenue data for both television and radio is sorted alphabetically and by revenue growth (CAGR) and market rank. Additionally, the revenue growth data is presented regionally, covering the Pacific, Central Gulf, Mountain, Upper Midwest, Mid-Atlantic, South Atlantic, New England, Great Lakes and Central South regions.
Broadcast Investor is a regular feature from Kagan, a group within S&P Global Market Intelligence's TMT offering, providing exclusive research and commentary.