Barrett: There's Growth After '10 Political

Broadcasting appears headed for another slump next year. Much of the political advertising will disappear, there will be no incremental spending around the Olympics and the economy is showing few signs of life.

Yet, David Barrett believes that the 31 stations in 25 markets he oversees as CEO of Hearst Television could grow revenue. “There is no notion here that our business has to tail off next year,” he says in this interview with TVNewsCheck Editor Harry A. Jessell. “There are building blocks in place.”

Also, in Part I of the two-part interview (Part II will appear next Tuesday), Barrett says the key to maintaining revenue growth is hanging tough on rates in the face of weak demand; he asserts that he is comfortable now with Comcast-NBC merger; and he discusses the group’s digital and mobile strategies.

An edited transcript:

First, we’re seeing strong recovery this year. We’re private so we’re not reporting numbers, but we’re at the top tier of competitive performance.

Can you give me a number?

Yes. Our revenue through six months is more than 25% up. If one did all the calculus and made some assumptions about what’s incremental in political, we’re still looking at mid-teen increases in core business through the first half of the year.

And where is that coming from?

It’s very broad based. Obviously, automotive is strongly up, coming close to ’08 levels for us. We track 25 categories very carefully and there are only three categories that are down. They’re smaller categories and they’re downtrend is very small.

For us, the key has been that we have been able to restore some of the pricing points that we had to give ground on at the depth of the recession. The inventory utilization has been comparable over the past two or three years, but where we had a very difficult time last year was downward pressure on the pricing.

Are there any particular markets that are weak or strong?

Last year, our largest markets — Boston, Sacramento, Orlando — were particularly weak and they are recovering at the high level among our stations. The Midwest markets, the mid-size markets, have been less volatile for us over the past number of years. So we’re seeing recovery and improvement in every single market.

Have you been surprised by the strength of political this year?

No. It’s about where we thought it would be.

So, you’re fine in 2010. But what about next year — less political, no Olympics, listless economy? What’s the outlook?

We’re doing better than other media sectors, better than magazines, better than newspapers. TV works. Advertisers are recognizing that we hold the high place in the food chain and we shouldn’t take the precipitous drop in ’11 that some may anticipate. As an industry, we ought to control the pricing dynamic as best we can and sell the value of this medium. TV is doing better today because it works better than any other advertising platform. We have got to be mindful of that next year when there may be less demand in the marketplace.

Is there any chance you’re going to be able to report positive numbers next year?

I believe that we could report positive numbers next year. There is no notion here that our business has to tail off next year. There are building blocks in place. We’re going to be cautious until there are better economic indicators around the country. To me, it’s largely driven by jobs. If unemployment is still 10%, it’s going to be hard for stations, for any advertising-driven business, to recover to acceptable levels.

But, that said, you still think you can grow revenue next year.

Our stations in our markets, because of their leadership position, because of where they are competitively, can have a positive year next year. I don’t say that about the industry overall. There’s going to be winners and losers in this game when the economy is unstable.

You have heard me say for years that there is a Darwinian play going on here and there are some that are going to survive and thrive and there are some that are going to continue to have a very hard time. It’s about being leaders in the market, about having a distinctive position in the marketplace that gives you that advantage. That’s our bet as a company.

Let’s talk about Darwin. You believe a three-news market will eventually becomes a two-news market and a four becomes a three?

You’re going to see people not able to support a No. 3 or No. 4 news operation. They’re going to have to back off on that and, when they do that, it benefits the leaders in the marketplace.

You have always made a big commitment to political coverage. I take it that that’s still on the books this year?