It was a long, tough summer for cable’s top networks, but the big question is whether the ratings problems they suffered were a seasonal setback or a sign of long-term troubles.
Nine of the 10 highest-rated cable networks had lower primetime ratings among 18-49-year-old viewers during the summer, according to a report from Turner Broadcasting, and eight of the networks plunged by double-digits.
Using data for live viewing plus seven days of delayed viewing—the metric favored by programmers—only ESPN was up, with coverage of soccer’s World Cup driving a 27% increase. FX was down only 5%, and the biggest drop among the top networks was registered by A&E, which was down 30% as Duck Dynasty’s ratings fell closer to earth.
Among cable networks in the top 11-20 range, eight were down, with VH1 up 3% and HGTV flat.
Turner, with TNT down 26% and TBS down 18%, had no comment.
“The easiest days for cable are behind it,” says David Bank, RBC Capital Markets managing director.
Increasing revenue and profits at cable networks have been powering the growth at most big media companies. Lower ratings will make it tough for cable networks to continue to increase ad revenues.
Ratings showed a similar pattern in the second quarter, but Bank says he is not convinced this is a trend so much as something worth keeping his eye on.
From a financial perspective, Bank notes that most media companies reported lowerthan- expected ad revenue in the second quarter, but lower ad revenue did not result in those companies missing profit targets. Instead, networks are more dependent on their ability to increase subscriber fees and bring in revenue from new digital subscription video-ondemand players such as Netflix.
Those other revenue streams “have made advertising a less impactful part of the business,” Bank says. “It’s certainly impactful, but it’s not the key driver that it once was.”
In order for networks to thrive, they need new measurement that captures all the ways consumers are watching their programming, Bank says. “It’s an odd dichotomy. People are spending as much time with the medium, yet the audience isn’t really being measured,” Bank says. “The reality is, the state of the medium is in better shape than the traditional metrics recognize.”
But until new metrics take hold, it’s going to make viewership hard to monetize, Bank says. And the receding audience numbers will affect sentiment on Wall Street.
Another component of the ratings trend is a lack of hit programming, adds Bank. “What’s been the last hot show on cable?”