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New Report Says Streaming Hurts Kids, Off-Net Programs - Broadcasting & Cable

New Report Says Streaming Hurts Kids, Off-Net Programs

Analyst lowers earnings estimates for Viacom
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A new report indicates that the availability of programming
through streaming services such as Netflix is affecting traditional television
networks that show kids programming and off-net reruns.

Sanford Bernstein & Co. analyst Todd Juenger, a former
TiVo research executive, used TiVo set-top box data to analyze differences in
viewing behavior between streaming home and non-streaming homes.

Juenger found that "streamers' viewing choices have changed
over time, indicating Netflix is increasingly influencing their behavior. Kids,
syndicated TV and sports have lost; broadcast, movies, general entertainment
originals and news have gained."

He also found that "streamers have natural skews in TV
preferences based on different household demographics (streamers are more
likely to have kids) and pre-dispositions (streamers like movies, comedy, and 'smart' entertainment)."

In the fourth quarter, Viacom announced lower ad revenues
and earnings in part because of a sudden drop in ratings at Viacom that some
analysts suspected might be related to streaming. In his report, Juenger says
Netflix is "holding the smoking gun."

Juenger notes that if kids programmers like Viacom and
Disney pull their content off Netflix, it would cost each about $75 million in
revenue annually starting in 2013.

As a result, he has lowered his estimate of Viacom's 2013
earnings by 7 cents per share to $4.51.

If, as a result of these trends, creators of children's
programming and off-net programming decided to withhold programming from
Netflix, or seek higher prices, that would have a negative impact on Netflix's
earnings, Juenger added.

Juenger says that owners of premium, serialized original
content, including AMC Networks, News Corp. and Time Warner should be expected
to embrace (and seek higher prices from) Netflix. "This upside is usually
offset by audience declines for syndicated TV programming which makes up the
majority of hours on those networks," he added.

Juenger also noted that "Netflix subscribers do not seem to
be candidates for cord-cutting, but rather passionate TV and movie enthusiasts.
They want more TV, not less."

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