2021 Better for Broadcasters Than 2020, Not as Good as 2019
TV and radio stations are in better financial shape in 2021 than during the lows of the pandemic. But analysts, brokers and broadcasters don’t expect the outlets to soon return to the brisk business they were experiencing before the coronavirus crisis, they said in interviews.
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“Will they be back to 2019 levels in 2021?” asked Scott Van den Bosch, who analyzes the radio industry for Moody's. “No.” Radio stations could get closer in 2022, he said. TV is also not expected to reach its 2019 heights this year, said S&P Global analyst Justin Nielson. “It is not a rebound boom,” said Patrick Communications broker Gregory Guy.
Heartland Media CEO Robert Prather said advertisers are waiting longer to make buys, reducing stations' ability to predict earnings. “People are making late decisions on buying ads, even in local. They’re just not going out far on visibility,” he said. “We’re projecting a little bit ahead of 2020, a little bit below 2019,” Prather said. Guy said the degree to which broadcasters are recovering depends on the market and the status of a geographic area's stay-at-home orders. Throughout the pandemic (see 2003270055), lockdowns hit radio stations harder than TV, Guy said. Early indications are that Q1 will be good for TV, Nielson said.
Radio group Alpha Media announced last week that it's filing for Chapter 11 (see 2101250055). Analysts said COVID-19 woes likely exacerbated Alpha’s situation. The bankruptcy is “seen as more of a reset,” said Nielson, comparing it to restructurings by Cumulus and iHeartMedia that led them to diversify.
Radio station owners such as Townsquare, Beasley and Urban One are weathering the pandemic by refinancing their debt where they can, said Van den Bosch. With smaller margins and uncertainty about their markets, refinancing isn’t much of an option for small-market stations, said Dawn Sciarrino, radio attorney with Sciarrino and Associates. Such clients are “hanging on” so far, and their status is entirely dependent on the status of lockdowns, she said. If gyms and restaurants can’t operate, “they don’t buy ads,” she said.
The vaccine rollout hasn’t led to a bump in TV station fortunes, industry watchers said. The vaccine distribution pace factors into the uncertainty facing broadcasters, Van den Bosch said. Most states “stumbled around” the rollout, keeping the vaccines from stimulating recovery, Prather said. If inoculations become more widespread, with hundreds of millions vaccinated, a reopening could lead to a boom of “pent-up demand,” he said. People “want to travel, they want to go to shopping malls,” he said.
Prather said his TV stations are having increased ad buys for home improvement, furnishings and insurance. “People want to get their affairs in order,” he said. Nielson said automotive ads, a broadcasting staple, are also starting to recover, especially for used cars. Van den Bosch said stations may need to find replacements for the sorts of advertisers the pandemic hit the hardest, such as the travel industry.
A boom in political ads helped stations, and has largely died off, analysts and broadcasters said. How much that boosted stations also depended on their markets and had been hard to predict in recent years, Guy said. He compared it to the stock market. Prather expects 2022 to be another big political year for his stations.
Uncertainty about the pandemic made it tough for broadcasters to be sure of a station’s value, which could hurt mergers and acquisitions, analysts said. "There’s probably a disconnect between the bid and the ask,” said Van den Bosch. There's noise about possible M&A in 2022, analysts said. Apollo Global Management is seen as looking to purchase more broadcasters, and TV groups Meredith and Quincy are reported to be in play.
Entertainment Studios Network CEO Byron Allen says he wants to invest $10 billion in TV stations (see 2010080058), Nielson pointed out. A deregulatory decision on media ownership from the Supreme Court (see 2101250053) could also cause a wave of station takeovers, Guy said.