That’s not so easy to figure out.
Brian Wieser, senior research analyst at Pivotal Research Group, believes TV networks will still benefit from decent increases in carriage fees. Much of this analysis comes from historical and current rising data from pay TV providers and U.S. consumer spending data on entertainment and media.
According to Wieser, “expectations over a mid-term time horizon for high single digit growth rates across the industry remain achievable.”
No matter. Other analysts believe declining ratings will be a key negotiation point down the road for TV network-pay TV provider renewals. “On the surface, we don’t know why a pay-TV distributor would pay more for a cable network that is perpetuating the loss of linear viewers by selling content over-the-top,” writes Marci Ryvickers, managing director, equity research media analyst of Wells Fargo Securities, tells MarketWatch.
Part of this argument goes back to when traditional TV broadcast network used their higher ratings as price leverage, arguing that since they brought in more viewers than cable networks, generally speaking, they should get more money.
Now that the entire TV business is under duress for overall lower ratings -- as well as cord-cutting -- pay TV providers might feel that the TV ecosystem should change.
Lower TV ratings initially weren’t linked to cord-cutting and cord-shaving, according to analysts. Mid-size cable networks were pointed to as those making TV viewerships gains.
But we could be in a different environment, one where -- sans new OTT service gains from pay TV subscribers -- there might actually be an eyebrow-raising decline of 1 million subscribers of traditional pay TV packages.
Who can take the risk of actually dropping key networks going forward? Comcast, Dish Network, DirecTV, Charter, or a Time Warner Cable? One day soon, one daring company will make a stand. Will others follow?