Basic Cable Ads Poised to Slow in 2H ‘08, ‘09
SNL Kagan Research: Basic-cable-network revenue growth will decelerate later this year, in 2009.
By Robert Marich -- Broadcasting & Cable, 8/13/2008 5:23:00 AM
While 2008 is a banner year for basic-cable networks despite the weak economy, their revenue growth will decelerate later this year and in 2009, according to an SNL Kagan Research report unveiled late Tuesday.
The Monterey, Calif.-based media-finance researcher forecast that basic-cable networks will post healthy 10.4% ad revenue growth in 2008, but the increase will slip to a 4.7% gain in 2009 as the slowing economy becomes a drag on ad spending. Aggregate ad sales at channels such as CNN, Discovery Channel and TNT will then recover to 11.1% growth in 2010.
In 2007, SNL Kagan estimated that ad revenue advanced 10.5% to $19 billion and carriage fees spiked 15% to more than $20 million.
“Companies that publicly report ad sales for their cable nets showed positive second-quarter results spanning a wide range from +1% to +28%,” SNL Kagan senior analyst Derek Baine said in a statement. “However, we expect to start seeing more negative numbers in the second half of 2008.”
Over the next decade, total basic-cable-network revenue -- mostly advertising and fees collected from multichannel platforms -- is expected to grow 8.9% annually, SNL Kagan said. Total ad revenue is forecast to rise at an 8.1% annual rate, which is a slight deceleration from 11.6% over the prior decade.
Carriage fees are expected to rise 9.5% over the next 10 years, though that decelerates from 16.1% over the prior decade.
SNL Kagan sees total basic-cable-network cash flow growing to 10.8% per year over the next decade, reaching almost $40 billion by 2017.
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Cut basic cable fees to protect ad viability of basic cable nets and local cut-ins.
Adguy - 8/13/2008 12:47:00 PM EDT
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