TV Nets Grow Original Programming Hours, Profit Margins Dip

As media companies' profit margins slightly declined in 2015, original programming hours increased -- only recently helped by higher domestic advertising revenue gains.

Todd Juenger, senior media analyst for Bernstein Research, says broadcasting networks increased original programming hours by 3% in 2015 to 3,130 hours -- with cable network TV groups posting a 4% gain to 7,149. Individual kids TV networks were up 7% to 870 hours.

Bernstein says that only Time Warner cable networks (down 3%) and the NBC broadcast network (off 3%) witnessed lower original programming results in 2015. This analysis comes from Bernstein estimates and TiVo Research.

At the same time, profit margins -- mostly segment operating income -- fell slightly year-to-year, according to Bernstein Research. This list includes 21st Century Fox (for its broadcast network); Viacom; Disney’s cable networks (as well as a slight decline at ABC); Discovery Communications; and CBS.

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Profit margins improved at AMC Networks, Scripps Networks Interactive, Time Warner, and Fox’s cable networks.

For virtually all media companies, the fourth quarter witnessed sharply higher advertising revenue. AMC saw an 11% rise in domestic advertising spending, while CBS was up 8%; Discovery was 5% better; Disney cable networks added 14%, and ABC was up 8%.

Fox’s cable network grew 3% and the Fox broadcast network rose by “low double digit” gains. Scripps was up 7% and Time Warner added 5%.

Only Viacom went in the other direction -- down 4%, largely due to cutting down on advertising commercial loads.

Overall, Juenger says the picture is not good: “We continue to see this as just one component of a vicious cycle. Revenue gets pressure from decelerating affiliate fees and declining advertising. Networks respond to declining audiences by investing in more content.”

Juenger says adding more content doesn’t help to boost traditional TV audiences. Instead, it will drive more business to the SVOD services -- which in turn, will drive down traditional TV audiences.

1 comment about "TV Nets Grow Original Programming Hours, Profit Margins Dip ".
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  1. Ed Papazian from Media Dynamics Inc, March 2, 2016 at 1:39 p.m.

    I find it difficult to understand how an increase of 3% in original program hours----where, in the late evenings or the early mornings before 6AM or on Saturday afternoons?--- is diluting the audience of the broadcast networks in their main dayparts or driving more people to Netflix. As for profits, the headline says that the networks had small profit declines but the article refers to industry "segments" that include other players, I believe. Also, how are incomes from reverse transmission fees paid by cable and satellite distributors first, to the stations and then, through them, to the networks figured in? And what about the network's share of syndication aftermarket incomes gleaned from their primetime program partners accounted for? Our own analysis, indicates that when all of the non-ad revenue incomes are included, that ABC, CBS, and NBC are doing quite well, profitwise, though this probably is not the case for Fox, whose broadcast network is almost exclusively primetime and sports driven and does not include  the more lucrative daytime and fringe evening fare.

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