Analyst: Should Charter Drop Viacom Entirely?

Traditional pay TV video profitability has increasingly become more troublesome, says one media analyst. That could mean the possibility of dropping some cable network groups entirely.

Todd Juenger, senior media analyst for Bernstein Research, says this might be the case when with Charter Communications' ongoing carriage battle with Viacom.

“With each passing year, the math moves in the direction of dropping networks, because video sub profitability is decreasing. ... In fact, our math continues to show that, if nothing changes, average video sub profitability reaches $0 in the year 2023,” he writes.

Juenger says for Charter, the estimated video subscriber generates approximately $16/month of profit contribution, against Viacom networks, which costs about $3.15 per subscriber/month on average.

“If Charter believes it can drop Viacom and not lose more than 16.4% incremental video subs, then they should drop Viacom,” he says.



Long-term, pay TV providers should consider not taking on an entire roster of networks from a single TV network group -- at a loss -- “especially when so many OTT options now exist.” Some big pay TV companies like Comcast may be an exception, he adds. “We continue to see Viacom as most vulnerable,” he adds.

TV network groups -- Walt Disney, Fox, NBCUniversal, and Turner -- are paid more, but are riskier to drop, he adds. Other pure-play cable network groups -- Discovery Communications, AMC Networks and A+E Networks -- are paid a lot less than Viacom.

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