2012 elections boost TV stations; L.A. market reaches $1.4 billion

Politics may often seem like a dirty business, but for local TV stations it’s also a very good business.

Political advertising helped propel a 13.2% growth in television station revenue last year, allowing the broadcast industry to regain much of the financial ground lost during the recession.

A study by consulting firm BIA/Kelsey, released Thursday, found that local TV station advertising reached $20.8 billion in 2012. That was still short of the 2007 high-water mark before the financial crisis, automaker bankruptcies and car dealership closures led to a precipitous drop in local advertising.

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In 2007, more than $21.5 billion was spent on local TV station commercials.

The highly competitive Los Angeles TV market generated $1.4 billion in advertising spending, a 6.5% increase from 2011 levels, according to BIA/Kelsey.

While stations in Los Angeles did not reap significant sums from the race between President Barack Obama and Republican Mitt Romney, the local stations did pick up dollars from groups lobbying for various ballot referendums and a slugfest of a congressional contest in the San Fernando Valley.

Not surprising, TV stations in key battleground states in the presidential election were flooded with political ad dollars. Wisconsin TV markets, which ran commercials for a gubernatorial recall election as well as for the Obama and Romney campaigns, saw a 40% increase in spending compared with 2011. Another battleground state, Ohio, benefited from a 38% hike.

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Online advertising to TV station websites represented a mere fraction of 1% of revenue. BIA/Kelsey predicted that online ads will not be a major revenue source for some time. The firm estimated that online ads will not reach 1% of the total until 2016.

The BIA/Kelsey report also found that TV stations have become much more attractive to investors. In 2012, 97 television stations were sold, nearly doubling the level from 2011 when 50 TV stations were sold. The stations sold in 2012 were valued at a combined $1.9 billion.

BIA/Kelsey said it anticipates even more station sales this year, as merger-and-acquisition activity is already pacing ahead of 2012 levels.

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