Broadcast market set to bottom out

The gloom of economic downturn has spread to broadcast and professional video and now its constituents are looking to determine how low things will go, when a bottom will be reached and when the certain turnaround can be expected.

The cause of most of the negative impact on broadcasting, production and post, can actually be traced to declining ad revenues that preceded the current crisis.

Some of this decline was predictable long before the Wall Street ‘meltdown', in part because the US elections were wrapping up and the Olympics past, both major increasers of ad revenues. The year that follows is always weaker. And this past spring was also down.

As the Television Advertising Bureau (in the US) has identified, ad revenues were already weakened in 2008 despite the elections and the Olympics and that weakening - some 7% lower than in 2007 as measured in the second quarters - foretelling what was to come.

This was worsened by the terror attacks and their aftermath. We are not only experiencing a severe downturn, but also one that has been mounted atop an already soft industry market.

Universally, this has meant layoffs and buying freezes, with stations and networks trimming experienced anchors and top engineering staff, made most vulnerable due to their high salaries and benefits, replacing them with less experienced staff. It has also meant a reduction in new equipment purchases or approvals of new projects such as station re-building, OB vehicle contracts and digital upgrades.

That said, the declines have not occurred evenly. Our research shows pockets of increases despite declines. Most industry pundits agree that it is the post-NAB Convention period that is the most unpredictable period.

Because of the nature of the market, with so many months required to approve big projects, we may not see how deep the slowdown is or where the bottom will be, in our industry, until after that quarter. So far, NAB reports strong exhibit sales and end-user attendee plans.

And recent major shows, such as BIRTV drew record attendance and larger exhibit sales. So, the jury remains out on what the rest of 2009 will bring, how deep the industry recession will go and when a turnaround might start.

Some perspective is in order. The previous 20th Century recessions - besides the Great depression - tended to be shorter and lasted, on average, a mere six months.

This one certainly has been longer and deeper. Nonetheless, consumer confidence appears to still have some resilience to it, and that has traditionally been a major determinant of the trend to their increasing spending, corporate revenues lifting, and therefore advertising spending in broadcasting and ultimately in production and among manufacturers growing.

First, however, the stock markets must find a bottom and become bullish on investing. As far- fetched as that may sound, most economists think that could happen as soon as February after fourth quarter reports getting aired. After that rally begins, the cycle of improvements can begin.

Douglas Sheer is CEO of DIS Consulting Corporation and can be reached at This email address is being protected from spam bots, you need Javascript enabled to view it .

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