Detroit Stations Taking It on the Chin

TV stations in Detroit know exactly what stations in other markets are experiencing as they begin to cope with the full impact of the recession that is tracking the nation.

Stations in DMA 11 have been living with hard economic times for years.

"Detroit is ground zero in the global economic collapse," says Ben Burns, a media professor at Wayne State University. "Detroit and Michigan were in a recession over the past three or four years -- and the nation, now going into a recession, just exacerbates unemployment levels here."

Burns, once executive editor of the Detroit News, says the Detroit area's 9 percent unemployment levels will rise into double digits as the auto industry contracts.

The situation is the worst he has ever seen, Burns says.

"Detroit is the poster child for the challenges of television advertising," says BIAfn analyst Mark Fratrik as he was revising Detroit marketwide revenue figures -- downward -- for BIAfn's annual economic outlook for the television industry.

BIAfn estimates that Detroit's 2008 revenues fell 7.5 percent from the year before to $307 million, and it is figuring another 8.5 percent drop in 2009 to $280 million.

That's a loss of more than $50.5 million in two years.

"It's very difficult right now," says Trey Fabacher, vice president and general manager of the CBS-owned duopoly, WWJ (CBS) and WKBD (CW). WWJ is the only CBS O&O without a local news presence.

Most of trouble stems from those of the Big Three auto makers, which may or may not be saved by the anticipated federal bail out. "There's a fear of what the future holds for them."

The auto industry dominates the city. As the manufacturers and dealers have slashed jobs and advertising, so have other downstream businesses. The metro area seems locked in a downward economic spiral.

According to the Bureau of Labor Statistics, in October, the Detroit-Livonia-Dearborn area once again registered the highest jobless rate in the nation: 10.1 percent.

Bad news has gripped the city and won't let go. The mayor was forced to resign amid charges of marital infidelity and perjury. The two daily newspapers are cutting back home delivery to three days a week. And the Detroit Lions may be the first team in NFL history to go a season without a win.

Bob Sliva, vice president and general manager of Scripps' ABC affiliate WXYZ, says the market also somehow failed to get its fair share of the 2008 political dollars.

First, Michigan lost having a competitive Democratic primary when the state legislature reset the primary election date and leapfrogged it ahead of Nevada's primary. Candidates pledged not to campaign or run ads in the unsanctioned Michigan primary and any prospect of Democratic ad spending dried up.

"When you're doing planning, you look at historical trends. There was greater expectation for the presidential primary in the first quarter than what we realized," says Sliva. "It was significantly less than 2004; that's for sure."

Michigan had also been eyed as a presidential battleground, where the Republicans and Democrats would slug it out, 30 seconds at a time, for the hearts, minds and votes of the electorate. No battle ensued. It barely rose to the level of a good arm wrestling match.

The presidential money stopped abruptly in September when GOP candidate John McCain essentially conceded the state to Obama. McCain and Obama spent their money elsewhere and issue ads never materialized.

"Some last-minute issue money and some last minute state money for a Michigan Supreme Court justice helped out, but it certainly didn't replace the lost opportunity associated with McCain's announcement," Sliva says.

The stations are doing what they can.

CBS's Fabacher says his sales staff is reminding clients to continue marketing themselves in down times and to keep TV in their marketing plans.

When the presidential political advertising dried up, Fabacher says, stations were left with a lot of inventory to sell, a situation that depressed prices.

"Right now, it's trying to put plans together that allow people to spend what money they have to keep them in business," he says.

The CBS duopoly is also seeking new, non-traditional advertisers. "We are refocusing and revisiting how we do our business," he says. "When the economy turns around we are all going to be better off."

In the meantime, he says, promos, PSAs and DTV changeover spots are also getting more airplay, filling unsold minutes.

At WXYZ, Sliva says the reduction in his revenues is affecting his operating budget.

Non-"mission critical" spending has been cut, he says. "Travel and entertainment are things you like to do, but they're not critical to the day-to-day operation of the television station."

Sliva says he wants to avoid tampering with news, which is critical. WXYZ's Action News is generally the market leader with WDIV (NBC) and Fox O&O WJBK following closely.