Old Media's New Financial Story

NEW YORK (TheStreet) -- Skim a glossy trade publication about the TV business and you may see that Fox Broadcasting's coverage of Sunday's NFC Championship football game drew the industry's largest audience last week, while Fox's "American Idol" took the crown for non-sports programming and CBS's "The Big Bang Theory" was the top scripted show.

Interesting, perhaps, but this information has little value for investors. The real financial story about TV if you step back and look at the big picture is that audience and advertising revenue growth is fizzling out. Overall TV viewership is still increasing, according to TVbyTheNumbers.com co-founder Bill Gorman, but primetime audiences for broadcast networks have been shrinking by roughly 5% for years now. Viewers have largely been migrating to cable, where there are many more channels, resulting generally in smaller audiences.

In the current TV programming season that got under way last fall, overall ratings are down almost across the board for major cable networks and the overall prime-time audience for broadcast is also down a bit. This shrinkage in TV is a story we don't often hear from the media, which is dominated by a handful of large conglomerates that rely on TV networks as their largest source of profits.

But it's an important story for investors because the healthy profit growth enjoyed by many TV networks for some time now may soon be facing cancellation.

CBS(CBS) , the most advertising-dependent company in big media, is expected to report overall advertising revenue of about $9.1 billion for 2011, according to a sell-side analyst (the company will report its latest annual results on Feb. 15). That would mark a decline from the company's high-water mark of $10.49 billion reached in 2007, before the financial crisis -- four years ago.