Major local TV station groups could be the most affected by cord-cutting of legacy pay TV services in the coming years, according to Wells Fargo Securities.
Roughly 50% of overall revenue of
major TV station groups -- including Nexstar Media Group, Sinclair Inc., Tegna and Fox Corp. -- comes from domestic affiliate fees paid by pay TV distributors.
“Nexstar and Sinclair have the
greatest exposure to pay TV declines with [estimated] 54% and 50% of revenue concentrated in domestic affiliate revenue, respectively,” writes Steven Cahall, media analyst for Wells Fargo
Securities.
Those percentages are not expected to rapidly decline for some time.
For example, Nexstar and Sinclair will see 12% and 5% domestic affiliate growth in 2024, Cahall says --
adding that for Nexstar, these projections assume that its stations amid the current contractual-issue blackout on DirecTV will end soon).
Next year, 2024, domestic affiliate revenues
may see a decline in share as revenue grows, partly because 2024 is a major Presidential/political and Olympic advertising year where TV stations witness major increases in local TV advertising
revenues.
advertisement
advertisement
In 2022, the last big political and Olympic advertising period, revenues were projected to have risen sharply -- nearly 30%, to $20.4 billion, according to BIA Advisory Services.
Fox Corp., which owns TV stations and a major broadcast TV network, has been near the affiliate-revenue levels of Nexstar and Sinclair -- just under 50%, Cahall says.
For 2024, Fox is
projected to have 49% of its 2024 revenues come from affiliate revenues.
This would be much higher than other TV-network based media companies -- Paramount Global at 21%, Warner Bros.
Discovery at around 20%, Walt Disney at 15% and Comcast (NBCUniversal) at 7%.