NBCUniversal CEO Steve Burke didn’t sound overly enthusiastic about the state of the cable network ad market during Comcast’s earnings call Thursday.
NBCU owns USA, Syfy, Bravo and a dozen more cable networks, and Burke told analysts that while they can expect affiliate fees to go up, growth in ad revenues will be spotty.
“You’ve got ad sales, which is a function of ratings and CPM [cost for reaching a thousand viewers],” he said. “I think it’s quite possible we will have quarters where ad sales go backwards. But if affiliate fees go up and ad sales go backwards, you can still have revenue growth.” In the first quarter, NBCU’s cable network ad revenues were down 2.9%. Broadcast ad revenues were up 0.3%.
Overall NBCU is heading into the upfront in good shape.
“MSNBC's beating CNN in prime most nights. And then as you go into next year, we have the Super Bowl, the Winter Olympics and the World Cup on Telemundo, so we couldn't be going into the upfront with a stronger hand,” Burke said. “I think the advertising market is quite strong. We've already started discussions with big advertising buying groups. And I think we have a lot of momentum and a lot more to go.”
Burke said the cable network business remains a good business but that NBC’s cable network group was unlikely to replicate the 17% increase in revenue in the first quarter, which was boosted by new affiliation agreements kicking in and a big content sale.
“I don't think we're going to grow it more than, call it, low to mid-single-digit growth rate, but you've basically got a bunch of different ways that you make money,” he said.
“You can also make money on digital and other new technologies. Over-the-top, I think, is going to be moderately beneficial to these businesses,” Burke said. “We're not counting on over-the-top being a huge impact, but I think it will be moderately beneficial. And it's going to be a grindier business than it was, but it's a lot of cash.”
Burke was also asked about the prospects for a strike by the Writers Guild of America, which could impact the upfront and the beginning of the next TV season.
“I think in the majority of cases, things get resolved. And I'm optimistic and hopeful that the writers' strike will get resolved,” Buke said. “Strikes aren't good for anybody. The people on both sides of the table tend to lose and I'm hopeful that we're going to get it done. And we're coming down to the deadline.”