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?&rdquo



6 comments about "Merging TW, Fox Would Be A Cable Challenge".
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  1. 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 !!

  2. 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.

  3. 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.

  4. 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 ?

  5. Paula Lynn from Who Else Unlimited, July 29, 2014 at 8:59 p.m.

    SORRY, NS.

  6. 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.

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