The era of the skinny bundle won’t be good news for some cable networks.
“There's too many networks in the United States. And we've been saying for years that there's going to be a rationalization of those networks,” said Turner Broadcasting CEO John Martin on Time Warner’s earnings call with analysts Wednesday.
Wall Street is focused on subscription trends, both on the number of people buying pay TV from cable, satellite and telco companies, and the number of those subscribers who receive particular cable channels.
“I think there are going to be increasingly differentiated subscription trends, meaning that marginal or lesser valued networks are going to find it very difficult to keep their footing and keep pace with the best networks,” Martin said.
“As affiliates, whether traditional or not traditional affiliates, put out packages, smaller packages of better networks at lower economic price points, we're going to be able to attract back households into the multichannel ecosystem that have frankly moved away because they don't see the value of the bundles,” he said.
This will be good for Turner because its subscription revenue is concentrated in its big networks—TNT, TBS, CNN, Cartoon Network—that have programming consumer recognize and demand.
Asked about Hulu’s new service, Time Warner CEO Jeff Bewkes noted that “we’re going to try to be available in all of the packages consumers are interested in.”
On the advertising side, Turner had a good quarter with domestic advertising up in the mid-single digit range, including double-digit growth in news and sports, including the NCAA basketball tournament.
The market continues strong in the second quarter, heading into the upfront.
“We're seeing some of our inventory sell for upwards to 30% to 50% higher than last year's upfront levels,” he said. “We think all signs point to, frankly, the best upfront we will have seen in years. And we think our networks stand to gain at least our fair share of what happens in the upfront, and we think it speaks very, very well for just television in general as television is experiencing resurgence in the minds of brand advertisers as we're delivering reach and increasing targeting and audience capabilities. So very, very optimistic.”