Commentary
Silver TV Lining: Goodbye To Smaller Cable Channels? When Less Is More
- by Wayne Friedman , Staff Writer, October 10, 2023
TV network groups that have anywhere from 15 to 20 channels might have good reason to worry about their next negotiations with legacy pay TV services.
Those groups might be smaller -- thanks to Charter Communications and its reworked carriage deal with Walt Disney.
The upside, if there is one, is that some of those groups might be taking a small hit -- percentage-wise -- if you can call billions of affiliate fees and ad revenues a small hit.
MoffettNathanson Research says NBCUniversal has a 5% exposure here due to what it calls its “long tail network share of U.S. ad revenue" -- those small to mid-sized cable networks.
This list includes spinoffs of major TV network brand names. Paramount seems to have a lot of these under its brand names of MTV, Nickelodeon and BET.
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Warner Bros. Discovery might seem to be worse off with a 10% ad-revenue exposure, followed by Disney at 9%, NBCU with 5%, and Paramount at 7%.
In terms of “time viewed,” the same companies are at the top of the list. Warner Bros. has the most exposure at 20%, followed by Paramount at 19% and NBCU with 17%. Fox has virtually no network except for Fox Sports 2 -- but perhaps there is Fox Business to consider. And AMC Networks is at 15%.
Looking at total linear TV revenue (affiliate and advertising) for these small- to-mid-size companies, Disney is in the best shape with only 8% of its revenue threatened, while Warner Bros. Discovery is the worst at 13%.
WBD's worst showing could reveal itself to some extent due to its lack of broadcast TV stations and networks. Pay TV companies are hesitant to drop those networks and stations in their pay TV bundles.
With this mindset, Warner Bros. Discovery seems to be looking to accelerate its streaming D2C efforts -- adding live sports to Max, via Bleacher Sports Add-On Tier.
But more of a test comes with its aggressive push in looking to start up what it calls an “open beta” test to launch CNN Max on its streamer Max. CNN is still a profitable business, but its growth projections have waned.
Legacy pay TV service DirecTV is not happy about a “test” -- and told the company this.
Why? CNN Max will be using many live shows from its CNN cable TV network on the new service. This threatens DirecTV, and other pay TV providers -- in terms of the exclusivity with the CNN cable TV network they carry.
These moves more than challenge pay TV providers from taking their own aggressive position -- as Charter did with Disney, when it reworked its carriage agreement and left smaller Disney TV networks by the roadside.
Will other legacy pay TV companies be pushed to do the same? A long goodbye.
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
Wayne, total revenues for "long tail" cable channels that are threatened with extinction is only one metric. Another is how profitable they are and how they contribute to corporate profits. Since the TV programmers have been willing to gamble on launching streaming services on the premise that they will, eventually, become profitable, it follows that they must evaluate their cable channels in the same manner. Once carriage fees disappear for the smaller cable channels they cease to be profitable and must be let go or otherwise downsized into online phantom entities. By doing so the corporations' overal profit margins may actually improve---even if there is a small loss in total revenues.