A new note to investors from financial analysts at LightShed Partners poses the controversial question of whether broadcast networks should scrap entertainment programming given the long-term declines for non-sports programming and the fact that NFL games now dominate the list of most popular programming.
Citing data from the NFL’s recent meeting with the Federal Communications Commission, analysts Richard Greenfield, Brandon Ross and Mark Kelley write that it has become apparent “how irrelevant all non-sports programming is to broadcast TV viewership…Over the past 20 years non-sports broadcast primetime viewership is down over 75%, while NFL regular season viewership is up over 30% over the same period. Even more stunning is that NFL viewership on CBS and NBC reached all-time highs last season, despite all the cord-cutting that has shrunk the reach of broadcast TV.”
“The obvious question is why broadcast networks bother investing in general entertainment programming,” they wrote. “Given that general entertainment programming is not driving retransmission consent fees, if any of these forms of programming cannot cover their production costs via advertising and streaming syndication revenues, should they exist at all? It is beyond obvious that broadcast networks and stations drive retrans fees of $5/sub/month and growing from NFL programming alone; no other programming matters.”
The NFL also clearly understands its value and is in the process of renegotiation higher fees for rights. Those higher licensing fees could mean that “broadcast networks may be forced to cut back on general entertainment programming that does not cover its production costs, reduce the cost of programming or shift even more of that content to streaming platforms (AI should help with this).”
This also raises the question of “why Disney needs to be in the linear TV business as part of our long-term strategic questions for management.”
More on this is available here and here.
