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Peter Hamilton Consultants, Inc

U.S. Networks: Subscriber Decline Is Modest But Steady

The latest Nielsen Universe data reveals accelerating but still modest declines in the subscriber base of most U.S. channels that commission or acquire factual programs.

Cord-cutters and cord-nevers are a tiny fraction of the cord-keepers.

Multichannel Economy:

  • Channels will continue to spend on programming because they enjoy long-term agreements with cable and satellite operators.
  • For the operators, Video bolsters the value of their highly profitable Internet and Telephone products.
  • But for ad-supported channels, a smaller audience is available to view programs, and therefore to attract advertisers.

Network Expectations

  • These relatively small, steady declines in distribution do set expectations in the channels’ executive suites.
  • Mindsets range from the ‘cautious and frugal’ to apocalyptic.
  • Programming and production strategies, budgets, headcount, marketing campaigns, and more are all put under a microscope.

Big Swings

  • Only Nat Geo Channel is making lots of big, quality swings for the fences.
  • Its decisions are at least partly driven by Rupert Murdoch and his family, and their need to offset the serial scandals that have engulfed their Fox News and UK newspaper properties.

Chart

To help you understand the changing scale of the U.S. Cab / Sat economy, here is the year-to-year comparison of the distribution footprints of a selection of channels that schedule unscripted programs.

A Sample of U.S. Cable / Satellite Networks
Subscribers, 
May 2016 vs May 2017
(‘000)

  
NETWORKMay ’16May ’17+/-%
SUNDANCE59,34665,3235,97710.1%
INSP77,34480,6823,3384.3%
VELOCITY68,29071,3953,1054.5%
BBC-AMERICA76,33178,9622,6313.4%
BABY FIRST TV51,96753,9591,9923.8%
NAT GEO CH87,04788,9391,8922.2%
IFC69,76770,7199521.4%
OVATION46,35746,7243670.8%
WE TV85,41285,500880.1%
SMITHSONIAN36,32436,32510.0%
DISCOVERY LIFE47,10646,331-775-1.6%
OUTDOOR38,34137,399-942-2.5%
ID85,28184,224-1,057-1.2%
CNN92,63991,486-1,153-1.2%
FOOD93,95992,711-1,248-1.3%
HGTV92,11290,860-1,252-1.4%
HBO PRIME35,03533,762-1,273-3.6%
BRAVO88,26886,962-1,306-1.5%
UP68,92567,607-1,318-1.9%
CNN / HLN93,86192,509-1,352-1.4%
COOKING64,28162,834-1,447-2.3%
TNT91,75490,284-1,470-1.6%
AMC91,99590,368-1,627-1.8%
USA93,01591,319-1,696-1.8%
BET84,99583,239-1,756-2.1%
CENTRIC51,07049,307-1,763-3.5%
SYFY91,13389,329-1,804-2.0%
TRU TV88,48186,656-1,825-2.1%
MSNBC90,76988,874-1,895-2.1%
E!91,11189,156-1,955-2.1%
REELZ65,95063,981-1,969-3.0%
SHOWTIME30,17228,147-2,025-6.7%
VH188,93086,899-2,031-2.3%
TLC91,43089,340-2,090-2.3%
DISCOVERY93,01090,893-2,117-2.3%
ANIMAL PLANET90,22288,100-2,122-2.4%
LOGO49,59747,471-2,126-4.3%
NAT GEO WILD57,44055,309-2,131-3.7%
HISTORY92,72590,564-2,161-2.3%
A&E NETWORK92,24789,994-2,253-2.4%
CNBC89,76287,442-2,320-2.6%
FOX NEWS91,30288,820-2,482-2.7%
OXYGEN77,14174,646-2,495-3.2%
LIFETIME92,43689,923-2,513-2.7%
OWN (Oprah)79,24376,712-2,531-3.2%
MTV89,34286,691-2,651-3.0%
ESPN89,79786,946-2,851-3.2%
DIY60,26957,259-3,010-5.0%
TRAVEL87,09483,481-3,613-4.1%
AMER. HEROES56,74153,114-3,627-6.4%
WEATHER86,60282,919-3,683-4.3%
SCIENCE71,16867,321-3,847-5.4%
DESTINATION55,45651,448-4,008-7.2%
FUSE66,70762,690-4,017-6.0%
SPIKE88,36282,520-5,842-6.6%
CMT82,16774,090-8,077-9.8%
VICENA70,876NANA
TOTAL CABLE PLUS98,42396,375-2,048-2.1%
TOTAL U.S.116,400118,4002,0001.7%

Source: Nielsen Universe Estimates
(Note: The data addresses the “receivability” of channels and not the viewing of programs.)

Revenue Impact

  • License fees per subscriber top out at an estimated $7.20 / month for industry leader ESPN.
    • ESPN therefore suffered a revenue loss of around $250 Mn year-to-year.
    • That shook up parent Disney and Wall Street, and precipitated a big round of layoffs.
  • Sub fees for other channels are typically less than 50 cents / month, for example for Discovery.
  • They are as low as a few cents / month for latecomers like OWN or “utilities” like Weather.
  • But whatever the scale, a channel’s steady revenue losses frame expectations and shape programming decisions.

Key Takeaway

  • The Golden Age of U.S. Cable / Satellite may be over.
  • But the giant industry is far from falling off a cliff.
  • Thousands of hours of factual programs will be commissioned or acquired by the channels in the near future.

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