TV station advertising revenues are expected to grow over time, buttressed by political spending which still gravitates toward broadcast TV, solid core trends, and digital growth. While ad revenues will be challenged over the coming decade as digital media evolves, the ability to provide mass audiences as well as develop a digital revenue stream are expected to keep growth in the medium. TV stations, thanks to the strength of programming on the broadcast networks (including sports), are expected to form important components of any programming bundle.
The industry over-all is expected to be down 7% to $20.7 billion in 2015, while core ad revenues are projected to stay in positive territory. Year-to-date through the third quarter, industry national core is down 4%, while core local is up 1%, with improvements expected in the fourth quarter. In 2016, we project a 13% total gain to $23.4 billion on the strength of political revenues as well as Olympic spend.
Our political ad revenue projections call for TV stations to bring in $3.3 billion of political ad sales in 2016, a 15.0% increase from the $2.9 billion of 2012. The early windfall of political ad revenue in the third quarter along with continued growth in the fourth quarter is evidence of our projected record pace. The crowded field and expected fight for control of the Senate are making strong political spending on TV stations in battleground states almost certain.
Foundational challenges to the TV model — such as ad skipping, less live viewing (live is only about 65% of viewing for English-language networks), generational viewing habit shifts and the challenges of mobile measurement — lead us to restrict core ad growth at below GDP-like levels.
However, TV stations have more levers to pull in the future to grow ad revenues, such as growing digital, expanding mobile access to their live content via TV Everywhere services or future mobile rollouts, increased use of programmatic to tap into more ad-buying platforms, OTT/mobile delivery of their news and other local content, and selling to new advertisers.