By Bob Papper, Professor Emeritus - Hofstra University
This is the fifth in a series of reports developed from RTDNA's annual survey of newsrooms across the United States. Topics in the series include story coverage, what's new online, social media and mobile strategies, television and radio technology, budgets and profits, stations doing news, news director profiles, and our most popular areas of research; newsroom salaries, women and minorities in newsrooms, and broadcast newsroom staffing. A new report will be issued every two weeks through the month of July.
Business of news highlights:
- The big (business) picture of TV and radio news
- Cooperative ventures continue heading down
- TV news profits up, radio down
While not at its recent peak in 2013, profitability levels remained strong this past year. Missing percentages are non-commercial stations.
Note that the percentage showing a loss is extremely low, and, as usual, the bigger the newsroom, the more likely that the station makes a profit on news. As they do every year, the smallest newsrooms in the biggest markets hold down the profit percentages in markets 1 - 25. Missing percentages are non-commercial stations.
There was another small jump in the total revenue produced by news this year, and this is the second time in a row that both average and median news revenue have been half (or more) of total station revenue. Last year was the first time that had happened. But there's a caution in the numbers. As I've pointed out before, a high percentage of news directors say they don't know the answer to this question.
There were no consistent patterns this year on which radio stations made a profit on news. Usually there's something, but the only thing I can report this year is that stations in the West were way less likely to report making a profit on news.
I usually don't report the percentage of radio station revenue derived from news because so few news directors say they know the answer. But for the second year in a row, with over a quarter of news directors and general managers reporting, I'll note that they say that average station revenue from news was 9.7% ... with a median percentage of just 5%. The average was down from last year's 21%, but the median was up from last year's 2%. It varies a lot from year to year depending on how many all news and news/talk stations return the survey.
Major markets are those with 1 million or more potential listeners. Large markets are from 250,000 to 1 million. Medium markets are 50,000 to 250,000. Small markets are fewer than 50,000.
Website profitability: TV and radio
Radio and TV web profitability were pretty similar back when I started asking about this 15 years ago. Not today.
In TV, the bigger the newsroom, the more likely that the station made a profit on the web, with over half the stations making a profit in newsrooms with more than 50 staffers. Fox affiliates continued to lag well behind other network affiliates in profitability; otherwise there were few differences from one group to another.
Radio website profitability dropped by half this year from last --- down from 15.4% to 8.1%. The drop was particularly pronounced in large and major markets. Stations in the South and West did particularly poorly. What I cannot answer is whether it's simply the luck of the draw: Different stations fill out the radio survey each year, or whether something bad is going on at radio websites. We'll know more after next year's survey.
The general upward trajectory in TV is pretty clear; so is radio's up and down ride.
Overall, news budget numbers looked pretty good in TV ... less so in radio.
A year ago, a majority of newsrooms had budget increases -- for the first time since 2007 -- but the overall percentage that went up slid back below the 50% mark this year. Big four network affiliates stayed at about the halfway mark -- although just barely. The smallest newsrooms, 1 - 10 staffers, held the overall numbers down; others fared much better. Budget numbers were best for CBS and then ABC affiliates and lowest for Fox stations. Regionally, the South came out on top with the West lagging behind.
In radio, budget numbers for 2014 looked a lot like 2013 -- which looked a lot like 2012. Budget increases were most likely for the biggest newsrooms and in the biggest markets.
Local TV news beyond the local TV channel
The latest RTDNA/Hofstra University Survey also continues to show that the TV news business isn't limited to TV anymore, but the numbers also show a stabilization in the outside reach of a TV newsroom. The percentage of stations involved with other media is just about the same as a year ago, edging down from 75.9% last year to 75.1% this time around. That's still a very high number. The bigger the staff, the more likely that the station was involved with providing content to other outlets. Otherwise, differences were negligible.
More than a quarter, 27.8%, of TV stations reported being involved in a Shared Services (or similar) arrangement with another station. There were erratic differences by market size (51 - 150 were the highest), but there were no meaningful differences by staff size, affiliation or geography.
Of the stations involved in a Shared Services (or similar) arrangement, the average station supplied content to 1.76 other stations, but the median (most common) number was one. Stations ran local news on more than 90% of those other stations.
There are now 717 local TV newsrooms that run news on those and another 328 stations. The latter number is a new all-time high -- up from last year's 307. That puts the total number of stations running local news at a record 1,045.
TV news departments are providing content to a variety of other outlets
Stations providing content to another local TV station fell slightly from last year, but stations providing content to a station in another market rose by about the same amount. Interestingly, there was a big jump in both categories among top 25 market stations. Most of the other numbers were similar to the year before except markets 51 - 100, which dropped in both categories. Stations providing content to a local radio station went back up to about the same level as the year before last. Cable TV dropped in half, and mobile devices plunged from last year's 42.2%. I have no idea what caused that dramatic change in mobile numbers; every market size went down.
In most cases, the bigger the newsroom, the more likely that a station was involved in supplying content to another outlet -- except for supplying news to a TV station in another market, which actually went in the other direction.
NBC stations were most likely to supply content to another local station (probably a fair number to Telemundo stations, but I didn't ask that specific question). Fox stations were least likely to be involved with a local radio station.
Three-quarters of the small number of "other" outlets were either other stations in the same ownership group or a local newspaper.
Stations remain involved in cooperative ventures with others ... but not as much
The table above deals with stations supplying news to other media. The next table deals with cooperative ventures among media outlets. Overall, most of the numbers are just about the same as last year, but there has been an overall drop in cooperative ventures. A five and a half point drop now puts a majority of stations NOT involved in a cooperative venture. That's the first time it's been below 50% since I started asking the question in 2008.
Another TV station and local radio both dropped; local newspaper and "other" came in just about the same as a year ago. Note that, generally, the smaller the market, the more likely that a station is involved in some cooperative arrangement.
"Other" included other stations in a group, a network or a website.
Four years ago, I noted that cooperative ventures had been growing during a down or uncertain economy ... and that it would be interesting to see how they hold up as the economy improves. The last three years of steady shrinkage appears to answer that question.
All of the numbers are down from a year ago except "other," but most of the changes weren't large. Most of the "other" category involved video, audio (actualities), photos and packages.
After four years in a row of steady declines, the percentage of stations not involved in a cooperative venture but planning or discussing one actually went up slightly ... from 15.3% to 18.9%. Those planning or discussing are most often the smallest newsrooms (1 - 10 staffers) in the biggest markets (1 - 25).
Putting it (money) all in perspective
It's a lot easier to understand industry decision-making if you understand how the business of local television works. Local TV, generally, gets its revenue from 6 sources: over-the-air advertising, online advertising, retransmission fees, mobile advertising, network compensation and other (mostly production fees, events and miscellaneous income). That's the list, but from a more practical standpoint, here's where the money really comes from:
- on air advertising makes up about 85% of total revenue
- retransmission fees comes in around 11%
- online revenue averages around 3%
- everything else totals around 1%
Obviously, numbers vary from one station to the next, and market size matters a lot, but this is the overall picture based on attempting to put together enormously varying estimates from SNL Kagan, BIA Kelsey, TVB, Borrell Associates and speaking with station managers and corporate people.
For most stations, mobile revenue comes in near zero, and, these days, more stations pay the network for the affiliation than the other way around. Political advertising is obviously a part of on air advertising, and it can be a huge part (overall, as much as 12% of on air advertising in presidential years), depending on the year, the state and the market. I now live in a swing state, so a presidential race means, in season, all political ads all the time. When I lived in New York in 2012, I never saw an ad for either Barack Obama or Mitt Romney. Not one.
Bob Papper is Emeritus Distinguished Professor of Journalism at Hofstra University and has worked extensively in radio and TV news. This research was supported by the Lawrence Herbert School of Communication at Hofstra University and the Radio Television Digital News Association.
About the Survey
The RTDNA/Hofstra University Survey was conducted in the fourth quarter of 2014 among all 1,688 operating, non-satellite television stations and a random sample of 3,704 radio stations. Valid responses came from 1,281 television stations (75.9%) and 316 radio news directors and general managers representing 868 radio stations. Some data sets (e.g. the number of TV stations originating local news, getting it from others and women TV news directors) are based on a complete census and are not projected from a smaller sample.