• by Wayne Friedman , May 31, 2018

Although TV executives continue to talk up “premium” TV content, the future of TV production studios -- independently owned and big TV media-owned studios -- might mean speculative financial results in future years.

Michael Nathanson, senior research analyst at MoffettNathanson Research, writes that “industry financials don’t support the bullishness.”

Increased live sports programming, gains from Netflix to ramp up its own in-house production efforts, international TV sales showing signs of slowing, and a “decline from program sales to traditional domestic cable networks and domestic SVOD players are continuing to impair company growth.”

On the last point, Nathanson says much of Netflix's future spending is earmarked for its own original products -- not acquiring programming from the big TV production studios, which has run on sister TV networks.

With regard to independent TV studios, such as Warner Bros. and Lionsgate, he says: “The consolidation of Fox TV studio with either Disney and Comcast will only accelerate vertical integration of networks and sister TV studios.”

Fox is lowering its premium entertainment content efforts on its broadcast network.

Even media company revenue and cash flow from owning TV-movie studios have faced challenges. Collective revenues of TV production companies owned by CBS, Time Warner, 21st Century Fox and Walt Disney sank 3% in 2017, with cash flow (earnings before interest, taxes, depreciation, and amortization) sinking 2% for the second consecutive year.

Netflix is also a factor -- hiring major TV producers away from legacy TV studios such as Ryan Murphy, Shonda Rhimes and Jenji Kohan.

All this is happening as live sports programming continues to climb -- now representing 39% share of all total day C3 18-49 viewing for the 2017-2018 TV season among broadcast networks. This is up from 37% a year ago; 34% in the 2015-2016 season; and 29% the season before that. (C3 is the average commercial minute ratings plus three days of time-shifted viewing.)

Drama programming commands a 15% share; comedy and reality TV each have a 6% share. All have seen declines over the last five years.