Commentary
Where's The Legacy TV Networks/Pay Subscriber 'Floor'?
- by Wayne Friedman , Staff Writer, December 2, 2024
So where’s the "floor" for legacy TV cord-cutting -- when it comes to traditional pay TV subscribers? Analysts keep reassessing where declining subscribers on pay TV services will end up.
Some analysts say the current level of around 72.6 million subscribers (55.3 million traditional cable, satellite and telco subscribers and 17.3 million “virtual”/broadband subscribers) will bottom out to around 50 million.
A lot really depends on where live TV sports audiences land. Right now, there is much stickiness when it comes to major sports deals that could slow down cord-cutting a bit.
The NFL is in the middle of a long 11-year, $111 billion contract with broadcast TV networks: Fox, CBS, NBC, ABC/ESPN. (Amazon Prime Video had an exclusive streaming deal with Prime Video to air “Thursday Night Football).
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CBS and NBC have league agreements allowing them to simultaneously air NFL games also on their streamers -- Paramount+ and Peacock, respectively.
Here is another sports reason: The NBA just struck similar 11-year deals ($76 billion) with ABC/ESPN and NBCUniversal (and Amazon Prime Video).
For other live, linear TV networks, there are also college football/college basketball and Major League Baseball deals to consider.
It’s not just sports for broadcast network owners. To keep the lights on, in a way, other programming areas need to keep going (for their affiliate stations as well).
Although linear TV revenues and profitability keep declining, they are still ahead -- generally -- of where their streaming financial businesses are.
In addition to news content, prime time still needs entertainment (and new) content.
For the former, entertainment content airings during prime-time schedules also act like a promotional platform for media owners respective streaming platforms.
Crucial components in following this trend will come from those long-time pay TV consumers -- mostly older viewers, whose sticky behavior patterns tend to move slowly when it comes to major entertainment transitions.
What is the size of this group? It may be 50 million, and possibly even 30 million.
Why? There is a clause that allows all NFL media partners (except Disney) to opt out of their deals in 2029 -- just about four years from now. (The original TV contracts have 2033 expiration dates).
Why would they do that? Perhaps legacy media-owned streaming platforms will be much stronger businesses at that time -- a moment that could see legacy pay TV subscribers land on a new “floor.”
Basement, anyone?
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
Wayne, since it's all "TV" now---linear and streaming-----it may not matter what the bottom is for one of the two components. Most analysts still see "pay TV" levelling off at around 40 million homes out of a total base of roughly 126+ million homes. But as we both know, cable content can be had via apps, so its reach is wider. Also, most cable/"pay TV" homes will also use streaming services.
What will happen is the end of the far too numerous cable channels that can no longer justify the vital carriage fees that they once commanded. This great shakeout will cut the number of cable channels down to about 50 and many of those that remain viable will probably share their content one way or another with streaming "partners"--either in the same corporate stable or with outsiders. How and whom remains to be seen as the first step---divestment of excess cable channels---- is just beginning and may take several years to play out. This will be followed by a similar culling of excess streaming services and, eventually , of small to mid-sized market TV stations.
With an average person consuming only five hours of "TV" daily there's simply no way all of these program services can garner enough viewers relative to program and other costs to survive..