Big TV station groups continue to see the greatest downside with affiliate revenue as a result of more pay TV cord-cutting, a Wells Fargo report says.
According to the report, fewer pay TV subscribers -- including in the most recent quarterly period -- will eventually mean less affiliate revenue, especially for big, independently owned TV station companies.
“We think the third quarter reiterates the weakness in some of our companies due to their high exposure to pay TV decline,” writes Steven Cahall, media analyst of Wells Fargo.
Station groups with the greatest exposure -- in terms of estimated 2023 domestic affiliate revenue as share of overall revenue -- are Nexstar Media (54%) and Sinclair Inc. (53%), two of the biggest U.S. TV station groups.
Others high on the list include Fox Television Stations (49%), Tegna (47%) and Gray Television (41%).
This comes as local TV station core advertising revenue been only growing at flat to weak single-digit percentage levels over the past few years. The continuing positive trend for TV stations comes from every other year with major spikes with political advertising revenues.
Cahall says pay TV subscriber declines dropped another 7% in the third quarter of this year -- landing at 76.7 million subscribers for all linear and virtual pay TV services.
At that level, pay TV is now 56% of total U.S. households, at 131.5 million. Wells Fargo estimates that for all of 2023, there will be a decline of 6.6 million pay TV subscribers.
Estimated 2023 subscribers for the top pay TV services: Charter Corp. (14.2 million); Comcast Corp. (14.0 million); DirecTV (9.8 million); YouTube TV (6.8 million); Dish Network (6.5 million); Hulu + Live TV (4.6 million); Verizon (2.9 million); Altice (2.2 million); FuboTV (2.0 million); and Sling TV (2.0 million).