Broadcast companies spent about $10B last year for TV stations — and the acquisition spree will continue in 2014 with help from the two big rivers of cash, Moody’s Investors Service says in a report out this morning. “Larger broadcasters will make selective acquisitions or station swaps in 2014 to expand their footprints in key markets” while small and mid-sized players “will combine to further build scale and keep up with their larger peers,” writes Senior Credit Officer Carl Salas. The debt rating service predicts that political ad spending could hit $2.6B this year. Those spots plus ones tied to the Winter Olympics will boost revenues as much as 16% while the underlying market for TV station commercials will increase as much as 3% with strength in automotive and retail. Insurance companies, health care providers, and state and local governments could spend as much as $700M on messages related to the new Affordable Care Act. Meanwhile, revenue from retransmission consent deals with cable and satellite companies will increase 20% this year. All told, revenues for pure-play TV broadcasters could hit nearly $133B, including $90.5B from core ad sales and $22.2B from retrans agreements. “Broadcasters will issue new debt to finance acquisitions in 2014 and beyond, but their stronger balance sheets will help offset the higher debt burden,” Salas says.
Political Ads And Pay TV Fees Will Fuel TV Station Mergers: Report
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