Kagan: Slow Ad Growth For Cable In '09

TVThose double-digit percentage gains in cable networks' advertising revenues are about to change--dramatically.

With 10% or more gains in advertising revenue in 2007 and 2008, advertising revenue growth will be cut in half to around 4.7% in 2009, according to Monterey, Calif.-based TV research company SNL Kagan, due to a softening economy.

Cable networks' 2007 advertising revenue was $19 million, with license fee revenues at around the same levels: $20 million. License fee revenues improved 15% in 2007 versus the year before. Overall, total industry revenue increased by 12.6% in 2007 to around $38 billion.

SNL Kagan says the weakness in advertising sales will become apparent at cable networks in the second half of 2008. Saving cable networks' revenue bottom lines are license fee increases that will continue at healthy double-digit percentage increases.



The good news is 2010, which will see a recovery for advertising revenue, moving up to double-digit pacing once again with an 11.1% improvement over 2009. Looking farther ahead, in the next 10 years, total industry cable advertising revenue is expected to grow at a more modest rate of 8.1%--slower than the 11.6% growth of the previous decade.

While cable network license fees will help buffer lower advertising sales in the near term, license fees will also slow down over the next decade to a still strong 9.5% per year from a gang-busting 16.1% average over the previous decade.

Overall, SNL Kagan expects cable network overall revenue--advertising and license fees--to still grow a healthy 8.9% per year through 2018.

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