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Catching The Local: Cable Chugs Along

While local cable does not, and will not, rival national media buying, it plays an important role both for MSOs and programmers. The local advertising market mimicked national cable over the past decade. Local billings grew in that period from $634,000 to $3.2 billion in 2001, compared to a $2.6 billion to $14.2 billion gain nationally. What's more, the top four MSOs reported solid local growth. AOL Time Warner saw a nice jump in the second quarter of 2002 with revenue climbing 47%.

However, like its larger national advertising cousin, local ad spending is fighting its way through the current nasty downturn.

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Local billings were flat at $3.2 billion for 2000 and 2001 and will be up only slightly this year. (There is a faint silver lining here: Local cable did fare better than local broadcast for the same period. Cable held its revenue line while spending dropped for local over-the-air.)

There are macroeconomic trends working against local as well. Auto sales were off around 27% in October 2002 sequentially, which will almost certainly be felt at the regional and local level, and the nearly $1 billion spent in the recent midterm election is now past the industry.

There are, nonetheless, glimmers of a turnaround.

Other forms of low-cost advertising are on the rise, for instance. Cox Radio reported that local spending was up 12%, and several brokerage houses are reporting classified ads creeping up for the first time since late 2000. Local retailers are boosting marketing dollars ahead of the holiday season.

We see this turnaround gaining momentum in the coming quarters as the positive election results work their way to company bottom lines. Therefore, we hold to our estimates that local ad spending will grow to $10 billion in billings by the end of the decade.

For a complete breakdown of the local advertising market, see "Broadband Advertising" at www.kagan.com.

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Catching The Local: Cable Chugs Along

Cable World, Nov 11, 2002

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