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Over the past several years, growth in the $70 billion television advertising industry, a major source of revenue for firms ranging from cable companies to TV stations, has been declining.On one level, the trend is part of a more general advertising slowdown that has also affected industries such as print media and outdoor advertising. With many major advertisers, particularly in the automotive industry and financial services, falling on hard times, advertising spending is rising slowly, if at all. Factors specific to the television industry, however, have also contributed to this weakness - audience fragmentation decreases the value of each TV spot. At the same time, the rise of digital advertising media (the Internet, cell phones, mp3 players, etc) gives companies cheaper, more convenient alternatives. While cable and broadcast advertising remains a large part of total ad spend - about 25% - 2007 growth rates in all types of television advertising remained at 1% or less, often entering negative territory (see chart below). Internet companies and those television industry firms that have embraced the opportunities offered by the internet benefit from this trend; however, traditional television companies that depend on advertising revenues will see profits suffer if these trends continue.
With the proliferation of cable, broadcast, and satellite channels, video-on-demand, and various digital video recording devices such as TiVo (TIVO), television audiences are becoming increasingly fragmented, with fewer viewers watching each program. For instance, satellite television services provided by companies such as The DirecTV Group (DTV) and EchoStar Communications (DISH) have gained market share rapidly over the past few years and are now used by 27.6% of US households, compared to 24% last year. Cable television, despite enjoying much higher penetration rates, has been losing popularity; it currently reaches 61.3% of households, the lowest percentage since 1990. Such fragmentation can decrease the value of each advertising spot sold by broadcast, cable and satellite companies. The increasingly frequent tendency of viewers to pre-record programs and then fast forward through advertisements further aggravates this decrease in value.
Spending on advertising is highly correlated with general economic growth, which makes such macro factors as oil prices, the U.S. Housing Market, and U.S. Economic Cycles key influences on the advertising industry. Advertising spend in 2007 grew less than 1% over the previous year due to weakness in the housing market and growing fears of a recession. With the effects of the subprime crisis continuing to spread, 2008 may be another weak year. 
U.S. advertising spending devoted to Internet advertising has increased rapidly over the past few years, growing over 21% in 2006 to reach 7% of total advertising spend.  In comparison, total advertising spend on broadcast television grew only 10% annually in 2006 and most other media saw only single digit growth.  The Internet offers advertisers a high level of flexibility in presenting their message to the consumer at a lower cost than traditional 30 second TV spots.
As the Writers Guild of America's strike drags on into its third month, it is beginning to negatively impact the television advertising industry, compounding its decline. With thousands of writers on strike, existing programs must be taken off the air and new shows in development must be pulled, further shrinking already decreasing audiences. As viewers leave television for new media (i.e. the Internet), advertisers follow.  And, after finding profitable advertising venues outside of traditional television spots, they may not return to television even when the strike ends.