• by Wayne Friedman , October 18, 2013

Major TV-centric media companies will see continued lower share exposure to national TV advertising revenues in future years -- all as retransmission, affiliate fees and other revenues steadily climb.

A recent report from MoffettNathanson, an independent equity research firm covering media stocks, says that by 2015 Viacom, CBS, Discovery Communications, Time Warner, Walt Disney, and 21st Century Fox will derive around 30% of their overall revenue from national TV advertising efforts.

Viacom is estimated to have 31.1% of its overall revenue coming from national TV advertising; CBS, 29.0%; Discovery, 28.3%; Time Warner, 18.3%; Disney, 14.6%; and Fox, 14.4%.

For newer and smaller publicly traded companies -- Scripps Networks Interactive and AMC Networks -- the national TV ad levels are higher. Scripps will get 60.9% of its overall revenue from national TV advertising and AMC will pull in 41.1%.

Other revenue sources are growing. MoffettNathanson says retrans fees' compound annual growth rate will be around 10% between 2010 and 2015 -- three times that of advertising gains during the same period, growing at 2.2%. It is estimated that these carriage fees will be 30% of aggregate revenues by 2015, up from 20% this year.

National TV advertising as a percentage of overall companywide advertising will also drift down.

In two years, CBS will be at the low end for most major media companies -- getting 57% of all advertising from national TV, with 55% of that total coming from broadcast, and 2% from cable. (This estimate leaves out outdoor advertising revenues.)

Discovery Communications will get 55% of its all its advertising from cable TV while Fox will have 61% (35% from broadcast, 26% from cable); and Disney, 81% (50% from broadcast; 31% from cable).

Others will be at higher national TV advertising levels, with all of it coming from cable TV advertising: Time Warner (without publishing advertising) estimated to be 84% of all advertising; Viacom, 91%; Scripps, 92%; and AMC, 100%.

National TV’s share of the total U.S. advertising market in 2012 was at 28% with national cable TV advertising’s share at 17%. These share levels have been fairly constant since 2009, says the company.

Other equity researchers have noted that CBS will continue to reap benefits from carriage/retrans revenues in the coming years --- pulling in just over $2 billion for its own stations and from a share of its CBS affiliates by 2020.

MoffettNathanson says that in the next few years, national TV advertising spending will grow in line with gross domestic product growth -- with national cable TV advertising climbing faster than broadcast TV all from expected weakness in broadcast ratings. It also estimates by the end of 2013, U.S. advertising spending will “likely be close to about 1% of GDP”.

"Watching TV" photo from Shutterstock.

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