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Peter Hamilton Consultants, Inc

Outlook for US Factual Channels: Stress? Or Stress Fractures?

Two very important building blocks for the factual TV ecosystem are showing signs of stress. They are:

  • Network distribution.
  • TV Viewing.

This week:

  • What is the data?
  • And what might it mean for the factual sector?

1. DISTRIBUTION

Following is a selection of 48 channels that offer factual programs.

The data is from a Nielsen estimate of US households that received these channels in May 2012 versus May 2011 (‘000)

20112012Change%
OVATION43,26751,1487,88118.2%
NATL GEO71,34283,47412,13217.0%
STYLE67,17277,78510,61315.8%
FUEL31,69036,4824,79215.1%
BBC AMERICA68,50378,66210,15914.8%
VELOCITY37,00041,2124,21211.4%
SCIENCE68,25075,8707,62011.2%
BIO64,35470,0175,6638.8%
H263,26468,7745,5108.7%
OUTDOOR35,06537,7792,7147.7%
CENTRIC45,82849,1313,3037.2%
IFP62,51166,7214,2106.7%
NAT GEO WILD53,07456,6073,5336.7%
DIY NETWORK54,32957,4223,0935.7%
PLANET GREEN56,54059,5683,0285.4%
LOGO48,11950,5912,4725.1%
MILITARY57,73360,5852,8524.9%
ID75,68179,1253,4444.6%
SPEED78,80081,9793,1794.0%
OXYGEN77,17679,5222,3463.0%
COOKING57,78659,5351,7493.0%
CURRENT TV58,55159,3157641.3%
OWN77,78878,6338451.1%
WE77,59678,2896930.9%
SHOWTIME24,90425,1112070.8%
MSNBC95,70295,676-260.0%
TRU TV92,74392,548-195-0.2%
DISC FIT HEALTH49,29149,093-198-0.4%
AMC97,17896,762-416-0.4%
BET91,90791,497-410-0.4%
BRAVO95,29294,617-675-0.7%
ANIMAL PLANET97,56596,864-701-0.7%
WEATHER101,074100,271-803-0.8%
FOOD100,51799,717-800-0.8%
HISTORY99,67798,825-852-0.9%
LIFETIME99,97299,047-925-0.9%
TLC99,79998,870-929-0.9%
USA100,40299,420-982-1.0%
HG TV99,90698,918-988-1.0%
SPIKE99,81198,744-1,067-1.1%
MTV99,75398,642-1,111-1.1%
A&E100,18899,055-1,133-1.1%
CNN100,44199,300-1,141-1.1%
DISCOVERY100,89099,733-1,157-1.1%
VH199,24898,089-1,159-1.2%
SYFY99,30398,130-1,173-1.2%
TNT100,38599,096-1,289-1.3%
TRAVEL96,27394,822-1,451-1.5%
FUSE57,67855,922-1,756-3.0%

 

Takeaways

  • Nielsen’s total US Cable/Dish universe is 103,954,000 homes, down -1,186,000 (-1.1%).
  • Even industry-leading factual brands are showing losses from cord-cutting. Examples:
    • Discovery,  A+E and MTV lost -1.1%
    • History and TLC are -0.9%
  • Some digi-nets and channels with ‘intermediate-level’ distribution recorded big gains. Examples:
    • Ovation (18.2%)
    • Nat Geo gained more than 12 million viewers and Wild 3.5 million
    • Discovery’s digi-nets Velocity (11.4%) and Science (11.2%)
  • Overall, our big bucket of factual channels defied the trend.
    • Our 48-channels grew 2.3%
    • That’s a delta of 4% against Nielsen’s cable channel universe!
  • The biggest losers were movie channels like Starz (-22.1%) and Encore (-9.3%)
    • They are being hammered by online players like Netflix
  • Factual’s share of the overall programming mix is on the increase
    • There is a shift away from costly drama and TV entertainment to reality
    • Scripted channels like TNT, USA, AMC and FX are adding reality shows
    • They all want their Eureka moment in the reality goldfield!
  • For producers:
    • The relatively stable distribution outlook for factual channels – PLUS more slots to fill – means expanding demand for programming
    • Talent-based prodco’s are the big winners
    • Don’t expect creators of single docs and content-driven specials to grab much of the wealth
  • For programming execs:
    • Fully-distributed channels can expand their audiences only by winning viewers from the competition
    • That means JOB PRESSURE!
    • Expect a shorter stay in the executive chair before the boss presses the ejector button
    • Mid-size and digi-net programmers may count on their expanding footprints to raise viewing levels and therefore provide better job stability

2. TV VIEWING: WALL ST. SENDS A MESSAGE

Citibank’s Equities research unit caused quite a stir when it recently downgraded the outlook for cable programmers.

What was it that captured Citi’s attention?

  • Nielsen’s ’Traditional TV Usage’ report found a marked decline in overall TV viewing for Total Day TV for March 2012 versus 2011.

Findings

  • Usage was down 2% among Total Persons
    • Prime was down just 1%
  • Kids, Teens and Young Adults were down 5% Y-O-Y
    • Declines among 25+ was just 1%
  • Kids and Teens were down the most across all Ethnic breaks
    • Young Latino’s showed the largest decline of any group

Takeaways

  • Nielsen has launched a flurry of studies to figure out what’s going on. Explanations include:
    • An unusually warm winter
    • Cord cutting due to economic hardship
    • Flawed research methodologies
  • But followers of Teens and Twenties have another gut explanation:
    • Under 25’s just aren’t as engaged with traditional TV as they were!
    • They’re moving over to Online and App-based content that traditional players have been slow to embrace
  • Here’s an additional, shocking data point:
    • Nickelodeon has lost 25% of its Kids 2-11 audience this year!!
  • “Think Global. Act Local”
    • The US industry is mature:  Its business model is threatened and the audience is ageing
    • Senior managers everywhere will be pressed by falling valuations to reduce domestic headcounts and overheads
    • BUT there is still lots of growth potential outside North America
    • Watch international players like A+E, Discovery, Scripps and the beleaguered News Corp / Fox. They are likely to double down on their global programming initiatives to bolster their regional brands and sustain overall corporate growth
    • Disclosure: I worked as lead consultant on business plans for Discovery International, (including Discovery Europe, Germany, Middle East, Asia and Australia) as well as for Scripps, Travel (Travel UK was recently acquired by Scripps for $100 million), and others.

Next: Takeaways from Hot Docs and the engaging Hot Docs Forum

Photo:  Karina Astrup, an independent producer
whose film Despite the Gods enjoyed a crowd-pleasing premiere at Hot Docs.