‘Green Shoots’ Wilt: Media Fallout Ahead?

Since early March, we’ve been hearing about “green shoots” of supposed economic recovery almost daily. Just the suggestion of this concept, heavily promoted by the current political regime, has sent many banking and retail stocks up a dot.com bubble-like 300 – 400% in a short period of time.

But the more actual economic data we receive, the less it appears the recovery is real. And several recent stories have me wondering how this will impact our long-suffering local media:

— With a large number of car dealerships in Massachusetts closing, how can this not hurt local newspapers, television and radio? Auto advertising represents an important percentage of revenues in the media business. Does this impact the Globe’s survival prospects?

From the San Francisco Chronicle, take a look at how this is already impacting the badly-hurt Bay Area:

In flush times, television stations are accustomed to 30 to 40 percent profit margins. But the recession is goring even these cash cows with a 14 percent drop in advertising revenue in the first quarter of this year compared to last at Bay Area TV stations, analysts say.

Ad revenue took an even bigger tumble at Bay Area radio stations, with a 27 percent decline during the same period.

The main culprit is the imploding auto industry, which provides from 20 percent to one-third of the advertising revenue for broadcasters. With General Motors and Chrysler announcing plans last week to close 1,900 dealerships during the next year, it will take years for advertising levels to recover at TV and radio outlets. “And when it does return, it will be different,” said Robin Flynn, senior analyst at SNL Kagan, who recently conducted a nationwide study of advertising on radio and TV stations and projected the 14 percent TV decline.

“All advertising-driven media have been hit hard by the recession, not just newspapers,” Flynn said. “So companies are really trying to get creative to make up for that revenue.”

Spot TV ads drop

Broadcasters in top-10 markets like San Francisco are generally still profitable, Flynn said. Outlets in large markets are more dependent on national advertisers, so they’ve taken a bigger hit than broadcasters in smaller markets. In the first quarter of 2009, spot TV advertising by the top 200 Bay Area retailers dropped to an estimated $58 million from $62 million the year before, according to regional TV estimates by TNS Media Intelligence. And Bay Area radio stations – which collectively reach 5.5 million listeners a week – saw advertising revenue decline 27 percent in the first part of the year, according to a regional study by Miller Kaplan Arase Co.

“Never seen it this bad. Never,” said Mickey Luckoff, president and general manager of KGO-AM, who has been at the station more than three decades, much of that time with the news-talk broadcaster on top of the ratings chart. “It’s as close to a depression that I’ve seen in my lifetime.”

— Today, the Boston Herald reports JP Morgan Chase is largely exiting the mortgage market here in Massachusetts. That means they clearly don’t see an impending housing recovery here, or they wouldn’t be leaving New England. They’re voting with their feet.

I’m not sure how much local advertising Chase does here, but as a macroeconomic factor, it’s not encouraging.

What do these deteriorating conditions mean for already-weakened media outlets? How much worse does it get from here?

Westminster Dodge / Dorchester image: Mark Garfinkel, Boston Herald


11 thoughts on “‘Green Shoots’ Wilt: Media Fallout Ahead?

  1. Do you have to piss on the recovery, Bri-guy? What are you a moron?! We want it to be real. We NEED it to be real.

    Do you know what my trust fund looks like now? It’s not pretty. Kinda like Mags after a night of hard partying… talk the economy up, no matter who is in the Oval Office.

  2. The recovery could havebeen real if Barack Obama didn’t shoot-up a HUGE deficit with his Stimuluses and his administrative objectives and then plum-give-up on Capitalism … WHEN did we ever have a president that rejected Capitalism out-right … ? If you ask me … Obama is never going to snap out of it. The little common-sense-spat he may be having now will fade … Sanford/Romney ’12 !!!

  3. #1 said: We want it to be real. We NEED it to be real.

    Sounds like he has been watching too much Peter Pan.

    Remember how Tinkerbell drinks some poison that Peter Pan is about to drink in order to save him? And then Peter turns to the audience and he says, “Tinkerbell is going to die because not enough people believe in fairies. But if all of you clap your hands real hard to show that you do believe in fairies, maybe she won’t die.”

    Circlet Soft wants all of us to clap because of the poison Obama is giving us. But we are not getting better and Circlet’s solution is to clap louder. (part of that hopey changey stuff)

  4. jbenson2: I have no patience for buffoons, using some “Fractured Fairy Tale” as an analogy for what Obama has done in 4% of the amount of time the previous administration took to screw things up. Look at what was on his plate.

    I just love the way all these Obama critics focus on the people who support him, we’re all “brainwashed”, right? They root for Obama’s failure, and call themselves “patriots”.

    Again, I have zero patience for buffoonery. It’s a waste of my time to put any effort into responding to jbenson2

  5. #7 said: what Obama has done in 4% of the amount of time

    Just consider how much damage this 4% has done to our children, our grandchildren and future generations.

    To paraphrase another President:

    2009 — a year which will live in infamy — the United States of America was suddenly and deliberately attacked by radical liberal and socialistic forces of the far Left.

  6. DJIA is up about 7% from inauguration day…we’re still in the woods, but most people are starting to feel like the worst is over. Undoubtedly models will change and the way we do business won’t be the same, but perhaps we won’t be built on a mountain of ponzi schemes either. Advertising, autos, etc. will not be what they used to be, but they will realign and emerge in better shape for the 21st century.

    Hoping for failure doesn’t make it so. Nor is it very productive or mature.

  7. I think people fall into two categories: those who are part of the problem and those who are part of the solution.

    I am just sick to death of those who bitch and moan about Obama. What else do they do? Do they go out and try to make a difference in their community? NO! They sit around and bitch and moan, and post on blogs.

    I don’t like to toot my horn, but I will to make a point. This morning I had some comp. time due to me. I spent it at a training facility putting together stuff to get out to young people for apprenticeship training. Kids who are not college material. I do it because I care about and want to see kids less fortunate get a break.

    And I did the same kind of volunteer work during the Bush administration as well. We can work together or we can stay divided.

    But I am really just sick to death of this crap. Keep bitching. I’m in no mood to continue with this negative bull shit.

  8. The solution would have been far better if Obama did nothing.

    Instead he and the Democrats have saddled America with decades of debt that we will never be able to resolve.

    Now that he has screwed the pooch, it is up to him to solve the mess he created. All his loyal supporters and lapdogs can continue to “hope for change”, but it is too late. The change is here and it stinks.

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