Analyst: TV Networks To See Steepening Cash Flow Declines

Financial profit projections for traditional TV networks will be getting much worse, according to a senior media analyst.

Todd Juenger, senior analyst of U.S. media for Bernstein Research, says cash flow -- earnings before interest, taxes, depreciation and amortization -- will sink from $38 billion to a collective $22 billion by 2025.

This equates to 7.3% decline on compounded annual growth rate -- a total drop of 41.2% -- by 2025.

In seven years, Juenger forecasts, pay TV subscribers will sink for many cable TV networks -- estimated to sink 2.3% on a compounded annual growth rate over that the period -- from 97 million currently to 82 million U.S. pay subscribers.

He also assumes that new, virtual multichannel program distributors will climb to 18 million from 5 million.

The positive news: Network affiliate fee prices will still grow 6.7% on a compounded annual growth rate to $76.6 billion. The negative: TV advertising revenue will sink 1.5% to $39.1 billion. Bernstein Research estimates programming costs to climb 6.4% over that period to $86.4 billion.



In addition to Bernstein Research estimates and analysis, the report uses data from SNL Kagan, Magna Global and Nielsen.

Juenger writes: “Many investors will disagree with the various line items, but we think it's fair to say that none of these assumptions are aggressively punitive.”

He adds: “Very importantly, we are not including the impact of a recession, which hurts advertising by definition, and we think will be a cliff event for cord-cutting.”

1 comment about "Analyst: TV Networks To See Steepening Cash Flow Declines".
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  1. Ed Papazian from Media Dynamics Inc, April 25, 2018 at 12:09 p.m.

    Wayne, in you report you say that Bernstein projects that "cash flow" for the "TV networks"---I assume this means the broadcast TV networks and the basic cable channels----will sink to $22 billion by 2025, while their ad revenues will drop to $39 billion and at the same time program content costs will rise to $86 billion. With programming costs---and these are not their only costs----at $86 billion and ad income at only $39 billion, it's going to take a rather huge amount of non-advertising income to generate that reduced cash flow figure---isn't it? This is a real head scratcher.

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