Growth is coming from sports and streamers, MoffettNathanson’s Robert Fishman finds.
MoffettNathanson researchers expect U.S. media giants to use strike savings to cut costs and reduce debt burdens, while also focusing more on sports-related programming and fewer pricey U.S. dramas.
MoffettNathanson sees the e-commerce giant’s move as more bad news for linear TV.
Netflix’s ad-supported service strategy is still taking shape, but industry analysts are starting to make estimates on how quickly this emerging piece of the company’s business will materialize with respect to both revenues and subscriber growth. Following an earlier forecast that Netflix’s domestic advertising revenues could hit about $1.2 billion by 2025, MoffettNathanson, armed with more details about the potential pricing and rollout plans Netflix has in mind, now expects the streaming company’s global ad play to generate about $2.7 billion in advertising revenues by 2025. The estimate includes $1.7 billion in from Netflix’s US and Canada business and $1 billion from the rest of the globe.
A combination of continued quarterly subscriber erosion, the shift of their best programming to streaming platforms and declining affiliate-fee growth could help accelerate the demise of linear TV as we know it, according to a MoffettNathanson report.
The first quarter of 2022 was not — to say the least — rosy for the linear video industry. In fact, the industry collectively lost an estimated 2.1 million subscribers across cable, satellite, telco and almost all virtual MVPDs, according to a new report from MoffettNathanson. Total net losses for the linear video industry marked “the worst quarter since the COVID sports (and jobs) blackout in Q1 2020,” wrote analyst Craig Moffett, with the industry shrinking 5.1% year over year.
Exclusives
The media analysts at MoffettNathanson want you to know that Fox shares are terribly undervalued. So if you lost a lot of money on Netflix…
Commercial banking company SVB Financial Group has agreed to acquire MoffettNathanson, the influential media research firm founded by analysts Craig Moffett and Michael Nathanson, for an undisclosed sum.
The number of traditional pay TV households in the U.S. will continue to decline and could equal the amount of non-pay TV homes in the next few years. That’s according to new estimates from media analyst firm MoffettNathanson, which is forecasting that the number of households sticking with traditional pay TV will shrink to below 60 million by 2024. At that point, the firm estimates there will be approximately 73 million U.S. pay TV subscribers (including virtual MVPDs), down from 93 million in the third quarter of 2019 and 84 million in the third quarter of 2021.
SVB Financial Group’s investment-banking arm SVB Leerink is in talks to acquire equities-research firm MoffettNathanson LLC, according to people familiar with the matter.
MoffettNathanson says bundling Disney+, Hulu could attract older viewers, while Barclays points to more and better content
Google didn’t provide a new subscriber total for YouTube TV in the first quarter but one analyst estimate suggests that it was the slowest period for the virtual MVPD in years. According to MoffettNathanson’s latest Cord Cutting Monitor, YouTube TV added 75,000 subscribers during the first quarter. It’s higher than the 43,000 net adds reported by fuboTV and much better than Hulu + Live TV’s 200,000 and Sling TV’s 100,000 net losses. But, according to the analyst firm’s chart tracking YouTube TV’s growth back to the first quarter of 2017, it’s the slowest growth quarter for the vMVPD since the third quarter of 2018.
The new rights deal that include streaming rights “ends the retrans gravy train,” says analyst Rich Greenfield, while Moffett Nathanson says the biggest losers “will be the non-O&O affiliates of NBC and CBS.”
Traditional television has been on the decline for years, but the continued economic fallout from the Covid-19 pandemic will make cord cutting even more pronounced, according to new research from MoffettNathanson. Traditional cable subscribers are expected to decline by 27 million over the next five years.
As the TV advertising market sees improvements in the second quarter — posting flat results versus declines in previous months — total TV advertising is projected to be down around 4% this year, according to one analyst. Second-quarter ad revenues were estimated to have dropped 0.5% to $12.2 billion, according to MoffettNathanson research.
Disney’s upcoming branded streaming service will likely be priced around $5 per month in order to drive wider adoption, according to MoffettNathanson analyst Michael Nathanson. He says that the new Disney streaming service and the upcoming ESPN services need clear distinctions. The ESPN service will likely test different prices as it prepares ESPN to be ready to go fully over-the-top, according to the report, but the Disney service is about building asset value instead of taking licensing money from SVOD deals.
Although concerns over digital video remain, strong growth is expected in the next few years. Analysis from MoffettNathanson, based on Magna Global estimates, forecasts that U.S. Internet/online video will see a 24% average annual ad revenue growth rate, rising to $20.4 billion in 2021 — from $7 billion in 2016. At the same time, traditional U.S. TV spending will have a 2% average annual ad revenue decline per year, totaling $60.4 billion. That is down from $67.1 billion in 2016.
An entertainment-only channel bundle priced around $10 has the potential to draw 4.6 million new subscribers into the pay-TV ecosystem, analyst firm MoffettNathanson says.
Fox Enthralled By Stations Again. But Why?
The news this week that Fox and Blackstone are forming a joint venture to acquire Tribune Media had researchers, analysts and plain old columnists like me wondering why, and sorting through the implications not only for Fox, but also for Sinclair, Nexstar and CBS.
Sinclair Seeing Weak Core In 1Q And 2Q
The company attributes the softness to weakness in the food and retail categories and the loss of revenue from for-profit technical schools that have gone out of business. The good news was auto, which grew 3%.
21st Century Fox’s plan to form a joint venture with Blackstone to buy Tribune Media would create value from cost synergies and by putting Fox into six more NFL markets, says the securities research firm. What’s more, it blocks Sinclair from acquiring the Tribune stations — a move that would boost Sinclair’s national programming ambitions and get it more leverage in reverse comp dealings.
CBS and Fox networks have the best multiyear investor outlook, Wall Street research firm MoffettNathanson said in a report for investors today. The report noted that the viewership trends for media companies in the first quarter of 2017 will historically be seen as some of the weakest numbers ever. But the media sector was still “a strong out-performer in the first 100 days of the year,” and MoffettNathanson’s research team raised its EPS estimates for Viacom, 21st Century Fox and Time Warner.
MoffettNathanson has released a compelling survey, proving the analyst firm’s belief that OTT services are wise to keep their price points below $30 a month.
