Future Midsize TV Biz Model: Swap Higher Linear TV Affiliate Revenues For Streaming Subs

How are those small and midsize premium streamers doing? Generally speaking, most are growing -- but as expected, with continued startup losses. It might just be a general blueprint of where things are going.

CuriosityStream, now a public company via a SPAC (special-purpose acquisition company), seems to be an example.

For 2020, it showed some nice revenue growth at $39.6 million, more than double its $18 million take in 2019. It ended the 2020 year growing to 15 million subscribers -- up from 10 million in the fourth quarter of 2019. Not bad, especially considering all the bigger competition out there.

Now the not-so-good news.

Net loss hit a hefty $38.6 million, a bit better than the $42.5 million loss in 2019. There was also continued negative cash flow (earnings before interest, taxes, depreciation and amortization) -- a key indicator that analysts and investors consider -- at $38.6 million versus $44.1 million negative EBITDA in 2019.

Mind you, for a young company, this is par for the course -- showing top-line growth and rising subscriber numbers, as well as those ongoing losses. (Under its SPAC structure, this is even more expected, according to some.) Next year, it expects revenues to double again to $71 million.



CuriosityStream is a similar streaming platform to discovery+ -- it focuses on non-scripted TV content. There is another strong comparison: John Hendricks, who started CuriosityStream, founded Discovery Channel way back when.

Streaming comparisons may be misleading -- discovery+ is at 11 million subscribers right now, a bit behind CuriosityStream’s 15 million. That said, the former is only three months old; Curiosity Stream has been in the market since 2015.

Another modest-size TV network streamer, AMC+ -- from AMC Networks -- has 6 million subscribers. It projects 20 million to 25 million by 2025. Josh Sapan, AMC Networks CEO, believes by that time, streaming will be the biggest revenue contributor to the company.

Digging deeper, MoffettNathanson Research believes AMC+ and discovery+ -- two cable-TV network-centric streamers -- have big upsides. This means evaluating a tradeoff in the future: Can these companies make more money per user with streaming than  linear, live pay TV?

Looking at current affiliate revenue coming to each of these companies, MoffettNathanson says Discovery Inc and AMC Networks underperform. Each pulls in a lower share of affiliate revenue than share from time spent on linear TV channels.

That means there is more potential to gain from distribution, subscription and ad revenues in streaming.

Securing higher overall ARPU (average revenue per user) than with linear TV? That’s the plan. The question is whether there is any room in this dynamic for somewhat lower brand profile streamers -- like CuriosityStream -- to prosper.

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