Commentary
What Is A Cable Network Worth Now?
- by Wayne Friedman , Staff Writer, September 23, 2021
If you are a top AT&T executive, you probably believe it’s a bit less than you might think -- in terms of WarnerMedia and its HBO Max streaming service.
John Stankey, CEO of AT&T, says that with regard to its streaming business HBO Max, AT&T is pleased with its progress. He added this at a recent industry conference: “But we need that global momentum.”
And that’s where the potential spinoff of WarnerMedia merging with Discovery Inc comes in.
“It's trading right now like a cable network asset, if you kind of look at the evaluation within the stock,” he said.
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“My belief is, as we get through this, we should see that [value] multiple start to recognize the fact that there's a great direct-to-consumer business. That it should be valued in the same way the market is valuing other great direct-to-consumer businesses, given the prospect that's in front of it.”
All of which reflects back to cable network's piece of any major media company that owns one. You might have a great legacy TV cable entertainment-focused network. But that’s not what investors -- and consumers — want in the near term.
The original warning sign came in 2015 with perhaps the top U.S. cable network -- ESPN -- with its declining subscribers. Since then, the Disney-owned network made a significant and relatively rapid expansion to a streaming service, ESPN+, which now has 15 million subscribers.
A worse predicament comes when your new premium streaming service isn’t up to par in a business sense -- that it might need much more business clout. Apparently, that’s where HBO Max sits.
Scores of lesser-profile premium streaming services are hoping they can make up ground -- perhaps as niche services. Are they just treading water, looking for a big global or U.S. merger partner to grow their business value far more quickly versus their declining legacy, cable TV network? Oh yes.
If this condition is widespread in the modern TV industry, you can see why there is much urgency -- and possible panic -- among media and entertainment and communications executives.
Whether you are Walt Disney, ViacomCBS, or NBCUniversal, there will be an added question that businesses will be asking for years to come with regard to streaming: What becomes of your cable TV networks?
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
Wayne, ESPN ---the basic cable channel----hasn't lost any subscribers because it never had any. The cable systems and satellite distributors which offered ESPN, along with 150-200 other channels to consumers lost subscribers---not to ESPN but to their entire bundle of channels. I should also add that so long as the cable systems and satellite folks retain 40- 50% of all households as subscribers most of the major cable channels will remain very profitable enterprises---far more profitable than the broadcast TV networks, many TV stations as well as more than a few streaming services---due to program "carriage fees" paid to the cable channels by their distributors---and, in effect, by consumers.
If I were CEO of a smaller streaming service, I
SOMEHOW I WAS CUT OFF, SO LET ME CONTINUE: I would try to meet with several CEO's of other smaller streamers and start merger talks. Maybe 6, 9 or 12 of these smaller streamers could pack a punch. I know personally, one of the things I would hope for is that their services would specialize in licensing shows that ran for one or two seasons and aren't available anywhere. I bet if I looked at a list of those shows, I could easily find a dozen. I'd be willing to pay a fee for something like that.