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.”