Bernstein: Cable To Record Solid 2009

Rachael Ray

In a report released Wednesday tabbed "It's Good to be a Cable Network," a Wall Street analyst offered a more auspicious forecast for how cable sales will finish the year. Particular improvement is slated to come at Discovery, Viacom, Time Warner and Scripps Networks Interactive, according to the Bernstein Research report.

Notably, Bernstein analyst Michael Nathanson moved Discovery Communications into the plus column, revising projections that its sales revenue would drop .6% this year. Now, he forecasts a 1.1% jump. That would be in line with the 1% increase (to $534 million) in U.S. sales over the first six months of the year.

Nathanson still projects year-over-year decreases at Viacom, Time Warner and Scripps -- but less than he had.

His 8.7% drop at Viacom has been adjusted to a 7.6% decrease. At Time Warner -- which includes TNT, TBS and CNN -- a 4% decrease has been altered to a 1.3% fall. A 2.7% drop was projected at Scripps, which has been adjusted to a 1.6% decrease.



Driving some of his adjustments, Nathanson wrote, was "tighter supply and improved pricing" in the third-quarter scatter market. All four companies will report third-quarter results in the coming weeks.

Ratings growth is also helping, with Nathanson saying cable networks continue to peel audiences away from broadcast at considerable levels. The gap between the highest-rated cable network and lowest-rated broadcaster in prime time is 30%, he notes.

That "may seem high," the analyst wrote, but the figure has "fallen massively" over the last four years.

Cable ratings this time of year would be expected to fall as viewers sample the new broadcast shows, but there have been some pockets of notable growth since the new season kicked off Sept. 21.

Scripps' leading networks have posted large gains. By one measure, 18-to-49 ratings are up at Food Network, which carries "The Rachael Ray Show," and HGTV -- 28% and 16%, respectively.

TLC has risen 16% within the Discovery portfolio, and Animal Planet has jumped 15%. The Discovery network is down 4%.

At Viacom, MTV and VH1 continue to post double-digit declines in the 18-to-34 demo. But Spike is up 15% in the 18-to-49 segment.

At Time Warner, TNT and TBS have seen notable drop-offs. TBS should improve with its coverage of the baseball playoffs. As expected, CNN is down with comparisons to last year's election coverage. TruTV is up 22%.

Next year, Nathanson is projecting solid growth in ad sales at Discovery (up 6%), Time Warner (up 5%) and Scripps (up 4%). However, he is somewhat bearish on Viacom's attempts to turn around the performance at MTV and some other networks, forecasting a 2.3% drop for the company.

Next story loading loading..