TVB Forecast

Opening remarks of TVB President Chris Rohrs at TVB Forecast Conference, Sept. 4, 2008

In September of 2000 we expanded our forecasting perspective to encompass a two-year business cycle. It reflected the reality and rhythmn of our business.

Now it’s time to fully and formally recognize that television advertising by itself is not the full picture of a Station’s revenue opportunity. With this forecast we will begin the practice of framing up the Total Revenue outlook for the Local Station business, including TV advertising, online revenue, retransmission payments and mobile.

A snapshot of today’s TV advertising component by itself is that of a mass-market medium taking it squarely on the chin from severe cyclical and marketplace woes…..

*A debt crisis that includes far more than sub-prime mortgages

*An energy-price shock and a staggering automotive category

*Sky-high food and basic material prices

With all due respect to the Federal Government’s experts, ours is a leading edge indicator of the consumer market and general economy and our business is screaming “recession”.

Inflationary cost pressure on the consumer is intense. So-called “core inflation” is said to be under control. That’s nice. Core inflation of course is calculated by leaving out food and energy prices, the very costs where the consumer is getting murdered.

This is a recession alright, and it hits Spot TV directly in the gut because we are such a powerful player in the consumer economy.

We do not believe that what’s going on in our business is equal parts cyclical and secular, as some would say.

It may be so for other traditional media, the changes facing newspaper, magazines and radio may even be predominantly structural and long-term in nature. But we believe that TV is different. We believe that the mid and long term outlook for our business to be very positive.

We’re evolving successfully into the digital era with strong plays to all screens, television, computer and hand-held, and, critically, our main-screen connection remains and will remain intensely vibrant.

Broadcasters are doing a great job, led by the NAB, of educating consumers about what’s going to happen on February 17 and the number of “unready” homes is steadily shrinking. And TVB, together with the NAB, the AAAA and the ANA, has formed a coalition called “Keeping the Ad Community in the Loop ” that focuses on the concerns of the all-important customer constituency. We’re happy to report that the customers don’t seem to be very nervous about Feb. 17 and, in fact, see the transition as a plus for everyone, and a big opportunity.

You’ve heard us predict before that when all is said and done with the digital transition the consumer will value high def TV above all the other advances. Add in the convenience and satisfaction of the DVR and the potential for reasonable interactivity and you have a TV screen that is certain to be the centerpiece of the consumer’s media experience as far out into the future as any of us can see.

With our plays to computer and mobile screens we add narrow-cast targeting capabilities to our unmatched reach and efficiency. And we do so in local markets.

In reality, we’re a player at both ends of the consumer adoption cycle, or purchase funnel. We build awareness, consideration and preference at one end and we directly and indirectly convert sales at the other end.

Later this morning David Poltrack of CBS will present his compelling argument that the internet makes an aware consumer radically more valuable than ever and that TV is the ultimate instrument of awareness-building.

So we believe wholeheartedly in the future! We just have to get there. And it’s the more immediate present that we have to work on here today.