Merging TW, Fox Would Be A Cable Challenge

Under a possible 21st Century Fox-Time Warner merger, combining the advertising-supported TV cable networks of Fox and Turner will be a challenge, according to a top media analyst -- given their content genres.

Michael Nathanson, senior research analyst of MoffettNathanson Research, writes that two of the programming genres of Fox and Time Warner’s Turner cable networks -- general entertainment and news -- have witnessed slow declines over the last several years.

For example, industry-wide cable network news -- Fox News Channel and Turner’s CNN and Headline News -- has seen its market share decline to 5% in 2013-2014 versus 6% in 2009-2010 as it concerns 18-49 gross rating points via the C3 metric (the average commercial ratings plus three days of time-shifted data) for a drop of 131 basis points.

Worse is that industry-wide general entertainment content -- where networks such as TNT, TBS and FX networks play in --- has seen its market share sink to 43% from a 47% share in 2009-2010 -- for a drop of 317 basis points.
More specifically, Nathanson says Fox and Turner entertainment networks are heavily dependent on acquired movies and off-network sitcoms and dramas.

A year ago, John Landgraf, chief executive officer of FX Networks, said he was worried about acquiring highly rated off-network sitcoms and big theatrical movies, according to Nathanson. In 2013, almost three-quarters of all FX gross ratings points on a C3 basis came from acquired movies -- 6% from “Two and a Half Men” and 4% from “How I Met Your Mother” reruns.

MoffettNathanson says 22% of TBS’ 18-49 C3 gross ratings points in 2013 came from movies -- the largest genre -- followed by “The Big Bang Theory” at 20%. Other sitcoms and programming content GRPs totals fall off from there.
For sister channel TNT, the largest supply of 18-49 C3 GRPs is also movies (22%) -- then comes the NBA (14%), “Castle” (11%) and “Law & Order” (9%).

Nathanson is also concerned with a possible shifting of cable sports franchises. There is speculation that Fox would like to take TNT’s big-rated NBA telecasts and potentially move them to Fox Sports 1 -- all to boost the nascent Fox sports network. But Nathanson wonders whether the league would allow this.

Also, he asks: “Can these rights be moved without causing a downward revision to affiliate fees at these Turner Networks?” “What will TNT put on in prime time to replace the highly rated NBA games that [is] 14% of its ratings and a higher [percentage of its] ad dollars?”
Tags: cable tv, m&a, ratings, tv
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7 comments about "Merging TW, Fox Would Be A Cable Challenge".
  1. Paula Lynn from Who Else Unlimited , July 28, 2014 at 7:13 p.m.
    Yadda Yadda. If something like this allowed to take place of such power and control of one magna-corporation, it puts another peg in the coffin of democracy proving unfettered capitalism is the door to an oligarchic country.
  2. Nicholas Schiavone from Nicholas P. Schiavone, LLC , July 28, 2014 at 8:38 p.m.
    I do not recall any comments like this from you, Paula, when Comcast went after NBCUniversal. Selective perception is a widespread problem in this industry. TWC could use a renaissance after Jeff Zucker made Anthony Bourdain his chief primetime news anchor at CNN. Brilliant ! Not !!
  3. Arvin Nundloll from EyeView , July 29, 2014 at 8:39 a.m.
    You mention TWC in the headline but Time Warner and Time Warner Cable are two separate entities.
  4. Douglas Ferguson from College of Charleston , July 29, 2014 at 8:40 a.m.
    Is the news decline mostly due to CNN, or equally FoxNews and CNN? Reporting that both are down obscures the culprit.
  5. Paula Lynn from Who Else Unlimited , July 29, 2014 at 8:58 p.m.
    Same goes for Comcast and NBCUniversal. Each step gets worse. Feel better, NC ?
  6. Paula Lynn from Who Else Unlimited , July 29, 2014 at 8:59 p.m.
    SORRY, NS.
  7. larry towers from nyu , July 30, 2014 at 11:55 a.m.
    More consolidation is a bad thing for consumers as well as content creators. These cable entities are nothing more than gatekeepers. The future belongs to disintermediation, direct distribution of content from producers/creators to consumers.