Bernstein Research analysis, along with SNL Kagan research, says gross profit margins -- which now average 25% for pay TV providers -- are projected to fall to 17% in 2018. They will be zero in 2023 if trends continue.
Aggregate affiliate fees on average for cable, satellite and telco TV companies could rise from $45 per subscriber to $58 in 2018 and $90 in 2023 if expected growth rates continue. Customers expenses, including marketing, will grow from $16 per month per subscriber currently to $18 in 2018 and $22 in 2023.
Currently, the average monthly price per subscriber for a pay TV package is $82, projected to rise to $92 by 2018 and $112 in 2023. But that won’t be enough.
Todd Juenger, senior analyst for Bernstein Research, writes: “MVPDs [multichannel video programming distributors] would lose money on every single network group by 2023. Obviously, current growth rates cannot continue.”
Pay TV providers currently pay the most to TV networks groups Disney ($9.93 a month) and Fox ($5.09/month). This will go to $14.67 for Disney and $9.43 for Fox in seven years.
Time Warner’s TV networks are estimated to climb to $6.30 in 2023 from $3.71 now. Viacom is expected to grow more slowly -- to $3.85 from $3.04.
CBS is estimate to more than double its fees from pay TV providers, projected to be $2.23 a month in 2023 from $1.11 a month now.