Nexstar, Sinclair, Fox Could Be Most Impacted By Cord-Cutting, Affiliate Fee Declines: Analyst
- by Wayne Friedman , August 22, 2023
Roughly 50% of overall revenue of major TV station groups -- including Nexstar Media Group, Sinclair Inc., Tegna and Fox Corp. -- comes from domestic affiliate fees paid by pay TV distributors.
“Nexstar and Sinclair have the greatest exposure to pay TV declines with [estimated] 54% and 50% of revenue concentrated in domestic affiliate revenue, respectively,” writes Steven Cahall, media analyst for Wells Fargo Securities.
Those percentages are not expected to rapidly decline for some time.
For example, Nexstar and Sinclair will see 12% and 5% domestic affiliate growth in 2024, Cahall says -- adding that for Nexstar, these projections assume that its stations amid the current contractual-issue blackout on DirecTV will end soon).
Next year, 2024, domestic affiliate revenues may see a decline in share as revenue grows, partly because 2024 is a major Presidential/political and Olympic advertising year where TV stations witness major increases in local TV advertising revenues.
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In 2022, the last big political and Olympic advertising period, revenues were projected to have risen sharply -- nearly 30%, to $20.4 billion, according to BIA Advisory Services.
Fox Corp., which owns TV stations and a major broadcast TV network, has been near the affiliate-revenue levels of Nexstar and Sinclair -- just under 50%, Cahall says.
For 2024, Fox is projected to have 49% of its 2024 revenues come from affiliate revenues.
This would be much higher than other TV-network based media companies -- Paramount Global at 21%, Warner Bros. Discovery at around 20%, Walt Disney at 15% and Comcast (NBCUniversal) at 7%.
Wayne, it's a bit misleading to compare Fox with CBS ( Paramount ) , Warner Bros/Discovery, Disney (ABC ) and Comcast ( NBC ) regarding the percentage of income derived from re-transmission or carriage fees on a corporate basis. If such information were available only for the TV networks and/or the stations owned by the various companies I'd wager thet the percents would be about the same. In fact, I also suspect that if there is future attrition of such fees it may especially impact companies that own stations mostly in mid-sized or smaller markets and also those which are "independent", as opposed to ABC, CBS or NBC O&Os or affiliates---as the latter may be valued higher by the cable syatems and satellite distributors.