Television analyst asserts that consolidation does not provide an immediate solution for advertisement troubles facing broadcasting stations
In the dynamic world of media, TV station businesses are grappling with significant ongoing challenges. The core issues revolve around the shift of advertising dollars from traditional television to digital platforms and the rise of self-serve ad platforms like The Trade Desk and Amazon.
The decline in linear TV ad revenues is a pressing concern, with TV and pay-TV advertising revenue expected to drop from $146.9 billion in 2020 to $126.1 billion by 2024 as viewers increasingly switch to streaming platforms. Meanwhile, advertising dollars are flowing to over-the-top (OTT) streaming services, which generated $22.8 billion in ad revenue in 2024 and are projected to reach $37.3 billion by 2029.
Broadcasters now compete not only nationally but also globally, especially due to streaming’s international reach and the rise of platforms with advanced targeting capabilities like Amazon and The Trade Desk. The shift in advertiser preferences towards data-driven, programmatic advertising and targeting capabilities offered by self-serve digital ad platforms is another challenge that linear TV faces.
Regulatory and ownership challenges also loom large. The Federal Communications Commission’s (FCC) ownership rules, recently challenged in court, impact broadcasters’ ability to consolidate and scale to remain competitive, affecting their market power and revenue potential.
Economic and operational pressures, combined with increasing operating expenses and long-term debt burdens, are impacting the financial health of some traditional media companies. Changing consumer habits and technology, such as declining shipments of traditional TV sets in mature markets and price competition, reflect broader challenges in retaining audience and relevance as digital consumption dominates.
The ongoing view of the challenges facing the TV station business, as presented by the Madison & Wall report, is not expected to change if the reported merger talks between Nexstar Media Group and Tegna are announced and completed. The proposed deal, if it materializes, would create the 18th largest seller of advertising in the world, with about $3.4 billion in ad revenue. However, consolidation may not be a quick fix for the ad woes facing station groups, according to the analysis from Madison & Wall.
Meanwhile, Gray Media has plans to acquire stations from AMG, and Block Communications also has stations that could be part of proposed acquisitions. Despite these moves, the report does not mention any specific investments made by companies in the local broadcast sector to reverse the trends.
[1] Report: TV Station Business Faces Significant Challenges [2] WSJ: Nexstar in Advanced Talks to Acquire Tegna [3] Global TV Set Shipments Decline [4] Traditional Media Companies Struggle Financially [5] OTT Ad Revenue to Surpass $37 Billion by 2029
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