Analyst firm BIA/Kelsey estimates the local TV broadcasters’ revenue totaled $28.4 billion in 2016, and that a significant portion of that came from retransmission consent agreements.
According to the study, stations brought in about $6.8 billion from retransmission agreements made individually or through ownership groups with cable and satellite providers. In addition, local television saw increased election advertising and double-digit growth through its digital media offerings.
"The dependence on retransmission fees has become incredibly important to local stations and many publicly traded ownership groups because it amounts to nearly one-third of their revenue," said Mark Fratrik, senior vice president and chief economist at BIA/Kelsey, in a statement. "The fees provide a sound financial basis for the stations and have also become the foundation for many of the larger stations. Our analysis also uncovered that even mid-size and smaller market stations are increasingly relying on the income provided by these fees."
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BIA/Kelsey is predicting that the continued rise in retransmission fees will contribute to overall growth for the broadcast TV industry over the next few years. Although total revenues are predicted to decline this year to $28.08 billion, the firm forecasts total revenues will reach $32.78 billion by 2020.
Over-the-air revenues are also growing for local TV stations, with some markets including Reno, Nevada; Charlotte, North Carolina; and Springfield, Missouri seeing advertising revenue climb more than 30% in 2016. Overall, the industry's OTA advertising revenue increased by 11.4% in 2016 but BIA/Kelsey predicts that 2017 will see a 4.1% drop in that category.
BIA/Kelsey also sees digital making a bigger impact for local TV. Revenues in 2016 totaled just more than $1 billion, up 10.4% over 2015. The firm expects digital revenues to increase another 8.8% in 2017.
"Stations continue to embrace the digital innovations that bring them viewers and that effort is paying off in increased local ad revenues," said Fratrik. "The local television markets are remaining healthy and will remain that way in the foreseeable future as long as they continue to improve their news, weather and programming options across all channels."