With cord-cutting continuing to accelerate -- now at around 7% per year -- one stock market analyst believes local TV station retransmission revenues of some $12 billion per year are in danger of
being cut.
More significantly, says Richard Greenfield, media analyst at Lightshed Partners, for TV stations and other platforms there is “less and less quality programming, as legacy media
companies now launch all their new shows direct to streaming.”
That means the price and value of the video bundle -- of which TV station are a major part -- “is
worsening.”
In turn, he says this means “the potential reach of linear TV continues to fall, meaningfully hurting ad sales.” This is driven by TV station groups continuing to
post weak “core” advertising results in their quarterly earning reports.
Still, he notes, this does not include what appear to be periods of ever-stronger political advertising
revenue.
He believes that now, due to the ease with which TV viewers can stop and start digital TV platforms -- including virtual pay TV providers -- subscriber churn is "at a far higher rate
seasonally, with significant numbers coming on just for NFL season or for World Cup. etc.”
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Greenfield also notes one instance earlier this year, when the CBS affiliate board rejected
CBS’ retransmission consent agreement for vMVPDs. That meant FuboTV, a virtual pay TV provider, lost access to the CBS affiliate around the country.
But CBS replaced the local
affiliates' feed with the national CBS feed -- which still included the bulk of a local TV station’s programming -- prime time, morning shows, national news and, perhaps more importantly, NFL
games.
Even with the loss of local CBS TV news, Greenfield says viewers and subscribers of FuboTV were probably not very concerned, as their ABC, NBC, and Fox stations still aired local
TV news.
Greenfield says Charlie Ergen, chief executive officer of Dish Network, sees much of this happening soon -- that in fact, local TV station may soon go the way of the current
financial troubles of regional sports networks-- that is increasingly finding it difficult to get carriage by pay TV providers.
In Dish’s more recent earnings phone call, Ergen
said: “The fact [is] that the local networks now are going the path of regional sports where the cost gets so high that… any rational company will make more money by not having the
service.”
Even though the NFL remains key for TV stations, increasingly you can get games on alternative digital platforms, says Ergen. “The next step in retrans is down, not
up… I said it about regional sports, I’m saying it now. That's where that’s going.”
From all of this Greenfield concurs: “We could not help but think
broadcast TV stations are headed for massive disruption.”