“Local TV has a high hurdle to clear”

In response to Raymond Snoddy’s article, Robert Kenny, MD at Human Capital, says: “Local TV has a high hurdle to clear to reach profitability, and with waning consumer interest and increasing competition for ad revenue the bar is getting higher all the time…”

“To understand people’s interest in local news, just look at the trends for local newspapers. Circulation (paid) is down 60% over the last 40 years. This has been roughly a straight line trend over the period, so the circulation shrinkage isn’t a problem caused by the internet, though the internet has done great damage to local advertising revenues.

It also isn’t about newspapers in general. Nationals are down a mere 35% in the same period. Simply, consumers seem to be getting less interested in local news with each passing year.

Local newspapers have responded to this by increasing their page-rates significantly (which, given their falling circulations, means their cost-per-thousand has gone up even massively).  However, classified ads represent roughly 2/3 of their ad revenue.

This is clearly not a source of revenue open to local TV. Assuming the chances of any customer paying for a local TV news subscription is low, local TV news providers will have to find advertising revenue somewhere.

But who will be these advertisers? We have no tradition of local TV advertising here, so a major change of small business behaviour will be required if they are to become a source of revenue.

This will also be a highly labour-intensive form of ad sales, given the small scale of any one buyer and the more complex logistics of TV advertising (as compared to print).  Meanwhile, the ways to deliver local advertising via online and mobile are getting more sophisticated with each passing month.

Local TV has a high hurdle to clear to reach profitability, and with waning consumer interest and increasing competition for ad revenue the bar is getting higher all the time.”