The majority of pay-TV operators upped their broadcast fees 12.8% in 2023, according to S&P Global Market Intelligence Kagan. 

Six out of the nine MVPDs tracked by Kagan raised the retrans fees paid to broadcasters during the past 12 months, bringing the national average to approximately $21.48 per month consumers pay to watch local broadcast channels on their pay-TV service. 

However, Kagan says the rate slowed compared to the 14% increase in retrans fees in 2022, attributing the decrease over cord-cutting and the myriad station blackouts that occurred during 2023. Kagan estimates that the 2024 figure will grow 14%, representing $22.62 of the average pay-T bill. 

Kagan estimates that the average retrans fee per subscriber charged to cable, telco and DBS operators in 2024 will grow 14% to $22.62. Among the providers, Kagan found that Comcast’s Denver market imposed the highest broadcast TV fee at an average $34.75 per subscriber every month. Cable One was the only cable provider that didn't change its broadcast fee in 2023. 

NEW YORK—The newly released S&P Global Market Intelligence Radio & TV Annual Outlook is projecting healthy growth this year for the U.S. broadcast station industry, with ad revenue for TV and radio stations expected to reach $36.47 billion in 2022, up 12.9% from $32.31  billion in 2021.

The 2022 S&P projection breaks down to $24.15 billion from TV stations — including core national and local spot, political and digital/online — and $12.32 billion from radio stations, which includes national and local spot and digital, excluding network and off-air.

The report is forecasting, however, that TV station ad revenue will be virtually flat between now and 2027, with increases occurring in political years. 

The report also noted that core advertising categories have mostly bounced back to pre-pandemic levels, with the exception of the automotive, retail and travel categories, which are still soft. The local ad market has been stronger than the national side of the spot ad business for many station owners.

Other key highlights include: 

• Over the five-year projection period 2022-2027, political advertising will be spent disproportionately on local stations in swing-state markets.
• Spending in the 2022 midterm elections, spurred by the 50/50 split between the two parties in the U.S. Senate and Republicans looking to gain a majority in the House along with major gubernatorial races in swing states, is expected to reach $3.49 billion, up 15.0% from the last midterm elections in 2018.
• Radio's lower ad cost, local audience and relatively high return on investment compared to other media will keep it relevant, although digital investments point to future growth opportunities with the spot ad market for radio expected to decline over the forecast period.
• Radio station owners are continuing to invest in streaming, podcast and digital marketing initiatives, with digital revenues expected to rise to $1.73 billion by the end of 2027.

NEW YORK—A new report from Kagan, a media research group within S&P Global Market Intelligence, is forecasting that the global TV market is forecast to show signs of recovery in 2022 and beyond, thanks largely to improvements in the supply of large LCD panels, which was the primary obstacle manufacturers struggled with in 2021.

Meanwhile, the rapid expansion of residential broadband penetration is opening up the addressable smart TV market, driving smart TV penetration in the total TV market.

Kagan is predicting that global smart TV shipments are estimated to grow 1.9% year over year (y/y) to 153.0 million units by the end of 2022 with a forecast of 2.3% compound annual growth rate (CAGR) from 2021 to 2026.

Despite a weak first quarter for global smart TV shipments, declining panel prices and the coming World Cup in November 2022 are expected to overcome the negative effects of inflation to spark consumer demand by the end of 2022, the researchers said. 

Supply shortages are still an issue for some components used in the assembly of LCD panels—especially those based on mature process technologies—but the overall supply for TV displays is slowly improving.

However, Kagan warned that the potential of a global recession, along with the continuing macroeconomic stress produced by many factors, including the conflict in Eastern Europe, could derail forecast growth.

The analysis only covers TV sets used for home entertainment, excluding commercial TV sets used in the hospitality industry as well as those used in public spaces and offices.

NEW YORK—Like many other parts of the economy, new data from S&P's Kagan suggests that inflation is putting a damper on streaming media device shipments. 

Kagan, which is the media research group within S&P Global Market Intelligence, is projecting that global streaming media device shipments are expected to fall 1.2% to an estimated 80.0 million units in 2022 as inflationary pressures keep many consumers on the sidelines. 

Kagan is predicating, however, that the market is expected to recover in 2023, with the global streaming media device (SMD) installed base growing from 232.6 million at the end of 2021 to 313.5 million by the end of 2026.

“The primary challenge to a steeper growth curve for SMDs is the persistent evolution in smart TV interfaces and processing power,” explained Neil Barbour, research analyst at S&P Global Market Intelligence. “As smart TVs become more capable streamers, there is less demand for external hardware solutions. SMD vendors appear to recognize the threat and have actively sought partnerships to deploy their operating systems on smart TVs.”

The analysis includes streaming media players, such as Apple TV, and streaming media sticks, such as Amazon’s Fire TV. This analysis does not include smart TVs, smart speakers, game consoles or other devices with ancillary video streaming functions.

Other key highlights  from the study include: 

• The surge in demand for internet video in the early days of the pandemic led to a flood of streaming media device (SMD) shipments, which drained volumes that would have otherwise emerged in late 2021 and 2022.
• Furthermore, chip shortages and complications in logistics have scrambled the low-margin hardware's business model. Consequently, vendors have been unable to substantively overhaul their product lineups, which has stalled growth in mature markets, or to significantly drop prices, which has stunted expansion campaigns in emerging markets.
• However, Kagan anticipates the market will return to growth as early as 2023 as market forces swing back in favor of low-margin hardware production. It is forecasting a 4.1% compound annual growth rate (CAGR) for SMD shipments from 2021 through 2026, enough to push the market close to 100 million units in 2026.

 NEW YORK—While economic worries have slowed deal making in the media sector, merger and acquisition activity in the hot video game industry continues at a record pace with two billion-dollar deals in June pushing the year's total gross transaction value of M&A to $102.21 billion, according to a new analysis from Kagan, a media research group within S&P Global Market Intelligence. 

Neil Barbour, the lead analyst on the new Kagan report noted that large M&A activity in the video game sector in 2022 reflected the industry's status as a revenue powerhouse as well as one of emerging growth opportunities. In addition, cloud gaming has the potential to grow console-style gaming's user base while in-game purchases will play a major role in metaverse development, Kagan reported. 

June was the second-largest month for M&A so far in 2022 ($3.40 billion in total), but it paled in comparison to the blockbuster deals announced in January whose value totaled $97.20 billion, Kagan said. 

NEW YORK—The pandemic fueled surge in demand for smart TVs cooled in Q1 2022, as the overall demand for smart TVs fell to down to pre-pandemic levels, producing a 9.2% year-over-year decline in total smart TV shipments in Q1 2022, according to Kagan, a media research group within S&P Global Market Intelligence.

At the same time, a shift in product mix—with most vendors increasing the proportion of high-margin premium products in response to component shortages—raised the average selling price, or ASP, by 21% year over year to an estimated $496. 

While the price jump contributed to the shipment decline, Kagan is still reporting a 10% growth in smart TV revenues in Q1 2022 to $16.63 billion.

Other key highlights of the new Kagan report include: 

• Despite declining smart TV shipments, pockets of growth remained among emerging markets, fueling growth for young brands like Xiaomi and TCL. Both Chinese companies are growing at least twice as fast as the more well-known Korean and Japanese brands with 19% and 27% respective y/y installed base growth in Q1 2022.
• With its head start in smart TV shipments and solid shipment volumes for the past seven years, Samsung's Tizen-based Smart Hub maintains the largest OS installed base worldwide with an estimated 23.1% share. Alphabet's Android TV is close to overtake LG's WebOS to be the second-largest smart TV platform by footprint.
• Smart TV revenue continued to rise in recent quarters driven by component cost increases that were passed on to unit ASPs, offsetting shipment volume declines.
• While demand in the premium space is relatively stable regardless of price, the same cannot be said about the low-end and mid-range markets where competition on price remains stiff, keeping overall ASPs from going completely out of control.
• While temporary boom-and-bust cycles in demand can have significant impact on near-term results, gradual smart TV adoption in emerging markets will have a greater impact on overall shipment volumes and revenue in the long run, Kagan reported.

“Competitively priced models from the Chinese TV makers have become attractive options compared to more traditional brands, as smart TV adoption gradually grows among emerging markets like India, Latin America and the Asia Pacific,” explained Milan Ringol, research associate at Kagan, part of S&P Global Market Intelligence

Kagan's quarterly global smart TV estimates of unit shipments, revenue, average selling prices, and installed base with vendor and OS breakouts are built upon analysis of publicly available industry reports and proprietary data models. 

The analysis only includes TV sets used for home entertainment, excluding commercial sets used, for instance, in the hospitality industry and in public spaces and offices. Revenue estimates include only unit sales and not revenue generated from smart TV usage through ads, platform fees, or the like.

NEW YORK—Kagan, the media research unit of S&P Global Market Intelligence, has issued a new report finding that the broadcast deal market for first quarter 2022 hit $11.05 billion, the highest quarterly deal volume since third quarter 2019. 

In the last 40 years, quarterly volumes exceeded $10 billion only eight times, noted Volker Moerbitz, the lead analyst for this report. 

“Most of these mega-volumes were due to one large consolidation deal or privatization deal, and first quarter 2022 was no exception,” Moerbitz wrote. “Standard General LP in partnership with Apollo Global Inc., which owns a majority stake in Cox Media Group Inc., announced a $24-per-share deal on Feb. 22 that would take private Tegna Inc., the third-largest TV station owner by revenue and one of the few remaining publicly traded groups.”

Kagan estimates the value of Tegna’s 64 full power and three low-power TV stations at approximately $8.71 billion, making it the second-largest transaction in broadcast deal history, topped only by the $8.75 billion 1999 Viacom/CBS merger, Moerbitz noted. 

Moerbitz also wrote that the Tegna deal involves several spinoffs that have yet to be filed with the FCC. Cox will acquire a group of four stations currently owned by Standard General affiliate Community News Media LLC, and an unspecified Standard General affiliate will acquire Cox's Fox outlet WFXT in Boston. These two transactions will need to close before the Tegna acquisition, he noted.

“In another transaction following the close of the Tegna acquisition, Cox will purchase the five former Tegna stations in Dallas, Houston and Austin, Texas,” Moerbitz wrote. “We estimate the value of these stations at approximately $1.30 billion.”

“Near the end of the quarter, on March 30, Cox announced another large transaction in which it will sell 13 full-power stations in 11 markets to Imagicomm Communications LLC, parent company of the INSP network for $488.0 million,” Moerbitz reported. 

“The top five transactions for the quarter totaled $10.93 billion and accounted for 99% of the quarterly deal volume,” he said. “The other 126 transactions still add up to a respectable $115.9 million.”

Top TV Deals of Q1 2022

NEW YORK—New results from Kagan Consumer Insights surveys of U.S. internet adults reveal that U.S. internet households used an average of 6.8 streaming video services in March of 2022. 

It was the highest level tracked to date but also up only marginally from an average of 6.6 services in September 2021, S&P Global Market Intelligence's Kagan found.

Mainstays such as Netflix, YouTube and Amazon's Prime Video continue to be widely used by many American households, but newcomers such as HBO Max, Apple TV+, Paramount+ and Peacock have driven growth in total streaming services used, the researchers said.  

The survey also found that subscription video services accounted for the majority of services used while free, ad-supported services (including YouTube) stood at about 30% share and social video with about 15% share of total services.

Interestingly, traditional multichannel households remain the most avid users of streaming services with an average of 7.6 services per home, Kagan reported. 

While cord-cutter households saw the biggest annual gains in total services used in the first quarter of 2022 with year-over-year percentage jump in services used at nearly 30%, the cord-cutter households still significantly lag other video household types with an average of 5.4 service used.

Services used by household income showed a more equal distribution, ranging from 6.3 services for homes with less than $50,000 in annual income to 7.2 services in households making $50,000 to $99,999. Households with more than $100,000 in income had the smallest annual gain in services used and were the only group to see average services decline from third-quarter 2021 levels.

Netflix and Prime Video were each used by more than half of U.S. internet households, but their usage levels were flat versus the first quarter of 2020. 

American consumers have also consistently turned to smaller niche services classified as "Other SVOD services" including ESPN+, BET+, Crunchyroll, AMC+, Fox Nation and OTT services from Starz and Showtime.

Multichannel homes used the highest average number of SVOD services at 4.2 services but also showed the smallest annual increase with a 1.6% gain from 4.1 services used in the first quarter of 2021. Especially those making more than $100,000 in annual household income — have historically been a key driver in SVOD usage gains.

NEW YORK—New forecasts from Kagan, the media research unit of S&P Global Market Intelligence, suggest that the ongoing move from console gaming to cloud-based gaming could dramatically boost broadband usage of gamers by 6x. 

That development could both put pressure on existing broadband networks and create new opportunities for operators to sell them higher bandwidth plans. 

The projections come at a time when broadband networks are facing a wave of new demand as video game publishers increasingly embrace cloud gaming services. 

Kagan estimates that console and PC gamers playing 42 hours a month, who transition from downloading software to streaming games via the cloud in HD, would consume six times more data and potentially need higher bandwidth plans to support their hobbies, according to Neil Barbour, the lead analyst for this analysis.

Key highlights from the analysis include:

• It is forecast that the U.S. game console installed base will contract by 15.4 million units over the next five years, and many of those users are expected to transition to cloud gaming.
• According to Kagan's spring 2022 U.S. Consumer Insights survey results, 69% of console owners play games weekly. If that percentage holds through the forecast, as many as 10.6 million frequent gamers could be moving from consoles to the cloud by 2026. That means each would consume an additional 378 GB of data per month on average, or 527% more than the average game download, which uses 60 GB of data, when playing for 42 hours on Xbox Cloud Gaming, which requires 20 megabits per second (Mbps) of bandwidth, Kagan predicted. 
• Hardcore gamers who transition to the cloud would also be on the network for longer periods of time and require more connection stability than they would if they were just downloading or playing multiplayer games, Kagan reported. Gamers may also need more bandwidth, particularly if other members of the household are playing or streaming video concurrently. It is estimated that less than 13% of U.S. broadband users subscribed to 1 Gbps or higher in 2021, while more than two-thirds of broadband customers to 100 Mbps or higher.
• The baseline for THE cloud gaming analysis is a 1080p stream running at 60 frames per second, a common expectation for hardcore gamers. Examples of cloud gaming client devices include streaming media devices and smart TVs.

NEW YORK—New forecasts and analysis from Kagan, the media research unit of S&P Global Market Intelligence, suggests that the U.S. residential broadband outlook will see even greater competition dominated by market share battles as the industry reaches a saturation point with residential service penetrations exceeding 90%.

Amid surging investment and technological advances, a new report written by Ian Olgeirson and John Fletcher at Kagan argues that a number of factors are driving increased competition, with telcos keying in on fiber upgrades, carriers fueling 5G fixed wireless residential and commercial broadband replacement, upstarts readying fleets of orbiting satellite broadband alternatives and cable fortifying its dominate market share a mix of DOCSIS 4.0 and fiber of its own.

“Behind it all is private investment aimed at capturing high-margin revenue and surging public money, most notably the federal push for better high-speed internet accessibility through the $42.45 billion Broadband Equity Access and Deployment, or BEAD, project,” the analysts explain. “The subsidies promise to turn up the heat on the entire sector.

“According to Kagan's update forecast, U.S. residential broadband subscriptions are on track to top 122 million at the end of 2022,” they add. “There simply are not enough subscribers to accommodate the growth ambitions of each segment. Cable operators believe they can continue to take market share, the telcos believe they can steal momentum with fiber, the wireless services believe 5G is their answer to residential substitution and the satellite services believe they can elevate access everywhere.”

Despite those pressures, the Kagan analysts predict that cable’s hybrid-fiber coax networks will continue to dominate residential broadband and that “the segment is positioned to limit market share loss amid intensifying competition with 61.9% through 2026.”

For telcos, fiber upgrades are revamping their networks, but legacy copper infrastructure limits the potential upside. “We forecast the segment can reverse the pattern of declines but is positioned for share to slip below 25% by 2026,” they wrote. 

Meanwhile Verizon Wireless and T-Mobile are ramping up fixed wireless networks and targeting both rural and non-rural areas. “We expect wireless-only homes are poised to grow from 8% to 12.6% of broadband subs by 2026,” they conclude.

For satellite, the outlook is mixed, they argue. “ The next generation of satellite broadband offers more room for optimism, but unfavorable cost and speed comparisons limit growth expectations,” they write. “A niche service for the residential space, we expect its slice of the pie to hold at 1% through 2026.”

NEW YORK—While sports programming remains extremely popular, the cost of sports rights and a dip in subscribers hurt profit margins at sports networks in 2021, according to a new report from Kagan, a media research group within S&P Global Market Intelligence.

The declining profit margins came despite the fact that live sports account for the most popular telecasts across broadcast and cable television. Ratings increased at most sports networks in 2021 following a disrupted 2020 sports schedule due to shutdowns related to the COVID-19 pandemic.

The report also found that the combined net advertising revenue of the top 20 sports-related basic cable networks increased by 13.2% in 2021, following a 23.2% decline in 2020. 

Sports networks charge operators some of the highest license fees in the industry, led by ESPN at $8.15 per subscriber per month, Kagan reported. This rate has consistently grown over the last 10 years at an average annual rate of 5.6%.

The rebound in advertising and high sub fees were, however, unable to overcome the rising cost of sports rights and ongoing cord cutting, which hurt subscriber numbers. 

Kagan reported that the U.S. basic cable network industry average cash flow margin was estimated at 39.7% in 2020, which it projected will decline every year to an estimated 31.2% in 2025.

Total subscribers to packages of live linear networks across traditional and virtual multichannel services declined nearly 4.6 million (5.1%) in 2021, according to Kagan estimates for total U.S. residential and commercial video subscriptions.

Sports rights fees are also rising far faster than inflation, with the major leagues bringing in about $15.5 billion per year under current contracts. Rising sports rights costs have been passed from networks to operators and eventually to subscribers in the form of additional fees, which could be up to an additional $15 per month.

NEW YORK—Seven years of growth in the global shipments of streaming media devices (SMD) has come to an end, with shipments declining 8% to about 28.6 million in Q4 2021, according to Kagan, the media research unit of S&P Global Market Intelligence.

Kagan attributed the drop to a lack of new hardware as well as heightened pandemic-fueled demand from a year earlier at the end of 2020. 

Even so, the overall global SMD installed base grew 7.6% in 2021 to 232.5 million, Kagan reported. 

U.S. shipments fell 10.2% year over year to 12.8 million. 

Kagan reported that the U.S. is the most mature streaming hardware market, and is more reliant than other regions on upgrades for older devices and home theater enthusiasts seeking the latest feature set. As a result, the lack of markedly improved hardware had a more pronounced impact in the U.S. than on the global stage, Kagan said. 

While Amazon.com Inc. remained the largest global vendor by shipments, with its wide geographic footprint and array of price points, it was not immune to the cooldown. Kagan estimates that fourth quarter Amazon SMD shipments fell 3% to 7.5 million units.

Roku Inc. overtook Alphabet Inc. to become the second-largest global vendor in the quarter even after falling an estimated 4.3% year over year to 6.6 million units. 

The quarterly decline in shipments across the major vendors contributed to an annual global decline of 2% in 2021, marking the first drop in Kagan’s annual SMD data set, which stretches back to 2013.

Amazon remained the global leader in terms of installed base. At the No. 2 spot, Roku outpaced Alphabet by a healthy margin. 

NEW YORK—A new survey from S&P Global Market Intelligence's Kagan research unit has found that about one in ten (11%) of Netflix users share passwords, a rate that is slightly down from  13% in 2019 and 12% in 2020.

The survey found that 85% of Netflix users said they were paid subscribers, including 20% that had established a paid subscription within the last 12 months. That left just 11% using a shared login and the remainder seasonal subscribers and free trial users.

Interestingly, the survey also suggests that Netflix login sharers are also generally less avid SVOD consumers overall compared to both Netflix users excluding login sharers and total survey respondents. 

Login sharers used an average of 3.9 total SVOD services versus nearly 5 services for total respondents and Netflix users minus sharers, the report said. 

Login sharers were also much more likely to turn to SVOD services on a weekly or monthly basis than the more frequent daily/several times per week usage demonstrated by total and non-sharing respondents, the researchers said. 

Compared to some of the other big SVOD services, Netflix tied with The Walt Disney Co.'s Disney+ for the largest share of users who indicated using a shared login, both at 11%.

Kagan is the media research unit of S&P Global Market Intelligence. It's Kagan Consumer Insights surveys span key markets in the U.S., Europe and Asia Pacific and track consumer behaviors surrounding topics including cord cutting, streaming video, connected devices, gaming and pay TV.

Additional results can be found here.

NEW YORK—In Q3, 2021, traditional cable, telco and satellite video sub losses rose to nearly 1.7 million compared to a year earlier but virtual subscriptions broke out of the doldrums to increase by almost 1.4 million, according to new estimates for total U.S. residential and commercial video subs from Kagan, the media research unit of S&P Global Market Intelligence.

That is helping smooth the losses for multichannel TV providers, Kagan said. 

It reported that the penetration of traditional multichannel TV services in the U.S. fell to only 52.7% in Q3. But when the subs to newer virtual multichannel video packages like Sling TV are included, the penetration rate is much higher, about 63.9% in Q3. 

When the virtual packages were included in the multichannel sub totals, Kagan reported that “the combined total customers with a subscription to a package of live linear networks dropped by an estimated 282,000, while virtual multichannel packages repeated evidence of third-quarter popularity with the return of football and other live sports.”

But Kagan also noted that penetration rates of the “traditional services are slipping toward the symbolic 50% mark. Estimated traditional residential multichannel subscriptions slipped below 68.6 million, accounting for less than 53% of occupied households. The combined virtual and traditional multichannel households accounted for less than 64% of occupied households at 83.2 million residential subscriptions.”

NEW YORK—As fiber adoption accelerates globally and consumers increasingly turn to alternative forms of entertainment online, multichannel operators, particularly telcos, are beginning to reconsider their video strategies, reports Kagan, the media research unit of S&P Global Market Intelligence, in a new blog post on global multichannel TV.

Kagan is predicting that multichannel households will reach a total of 1.10 billion by the end of 2021, a very weak 0.5% year-over-year increase, as subscriber gains in emerging markets barely make up for accelerated cord cutting in North America, Western Europe and advanced markets in Asia-Pacific. 

Video services, meanwhile, will generate $191.18 billion in revenues by the end of 2021, a 3.5% drop compared to 2020, thanks to declining annual video service revenues per user in North America.

Kagan also expects this trend to continue, with global video service revenues declining at a negative 2.4% CAGR from 2020 to 2025 due to rapid pay TV household losses in the U.S. and Canada. By 2025, video services revenue should drop to $175.6 billion, down from $198.1 billion in 2020. 

However, Kapan is predicting that video service revenues will continue growing in other global regions, with Eastern Europe posting the highest CAGR in that time period at 3.9%.

Those trends, Kagan argues, are convincing “a growing number of operators” to shut down traditional services and migrate customers to own- or third-party virtual multichannel or other streaming services.

As a result, multichannel penetration of TV households is expected to decline to 58.8% by end-2021 down from a peak of 60.6% in 2018, and continuing to decline to 56.6% by 2025.

Despite the expected multichannel penetration decline worldwide, the global number of pay TV subscribers will continue to grow in the next five to 10 years, Kagan said, with all regions except North America experiencing growth. 

Kagan’s researchers are estimating that there will be nearly 1.15 billion homes worldwide with a pay TV subscription by the end of 2025.

Although cable remains the largest pay TV platform on a global scale, accounting for slightly over half of the total multichannel homes in 2021, its market share and the number of subscribers are expected to continue declining in the next five years, with subscriber losses concentrated in North America, Western Europe and Asia.

In 2020, IPTV overtook DTH to become the second-largest multichannel platform worldwide, with an estimated 284.1 million subscribers at the year's end. IPTV is forecast to grow globally as well as in every region except North America, accounting for 28.9% of global pay TV homes by 2025. The DTH segment, meanwhile, will stagnate on the global scale and decline in the Americas and Western Europe, Kagan said. 

Mainland China, India and the U.S. have remained the largest multichannel markets by far, which should collectively claim 56.8% of the global subscriber total by the end of 2021. China and India alone claim just over half of the global market, Kagan said.

NEW YORK—The broadcast station sector will see very healthy 2022 results thanks to massive political spending and growth ad categories like legalized sports betting, according to “The Big Picture: 2022 TMT Industry Outlook” from Kagan, the media research unit of S&P Global Market Intelligence.

The report predicts that total TV and radio broadcasting station revenue will hit $40.05 billion in ad revenue in 2022, up 13.2% from $35.39 billion in 2021. TV stations expected to expand their revenue from $34.06 billion in 2021 to $38.22 billion in 2022. 

For TV stations, 2022 will represent a 20% bounce in spot ad revenue, which will include $3.25 billion in political ads and increased ads for betting services, while digital revenue will grow by a more modest 5% and gross retransmission consent revenue will see a 3% increase. 

Justin Nielsen, senior research analyst noted in the report that in addition to political spending, “legalized sports betting has already been a booming new ad category for broadcasters with station groups developing new programming outside the games on betting lines and best picks. Nexstar recently announced the launch of the SportsGrid Network, a diginet for sports wagering and fantasy sports, and Sinclair with their Bally’s partnership has a sports betting app and upcoming direct-to-consumer streaming service.”

“Other ad categories that are forecast to outperform in 2022 include healthcare, professional services, telecom, banking and home improvement with the auto, retail and travel categories still soft,” he added. 

SVOD will also continue to see growth in 2022, the report predicted. Online video subscription revenue should hit $33.9 billion in 2022, up from $23.5 billion in 2020, and $17.5 billion in 2019, according to Deana Myers, research director and author of the section on SVOD. 

Myers cautions however that “subscriber expansion could slow in 2022,” and that “high demand for exclusive and original programming has pumped up costs to a level that most streaming services will not be profitable for several years. Even Disney+, which has close to 40 million subs in the U.S., is not expecting to be profitable until fiscal year 2024. Recent sports rights deals struck with MLB, the NFL and the NHL could bring more live games to streaming services such as Prime Video, Paramount+ and Peacock, but spending billions on rights packages may pressure bottom lines.”

The report also predicted significant growth in the broadband sector, with subscribers growing from 116.56 million in 2019 to 131.01 million in 2022 and revenue from broadband services hitting $112.67 billion in 2022, up from $90.02 billion in 2019, thanks in part to Federal spending on expanding the availability of broadband service, according to Tony Lenoir, senior research analyst, who authored the chapter on broadband. 

Globally, the news is mixed for multichannel video business. “Multichannel households are expected to continue growing globally in 2022, up 0.7% to reach a total of 1.11 billion, as subscriber gains in emerging markets make up for accelerated cord cutting in North America, Western Europe and advanced Asian markets,” explained Mohammed Hamza, principal analyst and Julija Jurkevic, senior research analyst in the section on multichannel TV. “However, a growing number of operators are choosing to shut down traditional services and migrate customers to own- or third-party virtual multichannel or other streaming services. Multichannel penetration of TV households is therefore expected to decline to 58.2% by end-2022 after peaking at 60.6% in 2018.”

Other findings include: 

• After a pandemic pummeling, the box office is headed for a rebound in 2022 back above the $10 billion mark, though not without complications from shifting release windows.
• The pandemic-fueled shortage of global semiconductors that has broadly affected the consumer electronics, computing and telecommunications equipment segments is expected to endure through 2022, dampening smart phone and TV shipments.

NEW YORK—Video cord cutting and the migration of consumers to streaming video services will significantly reduce revenue for pay TV operators over the next few years, according to Kagan, the TMT research unit of S&P Global Market Intelligence. 

It’s latest forecast for cable, direct broadcast satellite and telco multichannel revenue predicts that their sales will dip from $91.1 billion in 2021 to $64.7 billion by 2025, producing nearly $33.6 billion in lost annual revenue that operators will have to recover from other sources. 

In a longer term perspective, Kagan’s data shows that multichannel video revenues hit a peak of $116.9 billion in 2016, which would mean the industry will have lost nearly half (45%) of its annual revenue by 2025. 

While all three major platforms are feeling the impact from the shift, “the magnitude of the losses are expected to hit more acutely for DBS and telco revenue subtotals amid waning commitments by major players and relative stability from the large cable providers,” the report said. 

More information on the report is available here. 

NEW YORK—If new forecasts of Netflix’s spending on content prove to be accurate, the streaming service’s total amortized spending may reach $13.60 billion this year and increase to more than $18.92 billion in 2025, according to Kagan, the media research unit of S&P Global Market Intelligence. 

Kagan is also predicting that over this period, Netflix will put more money into originals, with spending for originals increasing at a 14.0% annually with acquisition CAGR could be 4.8%.

The new report also highlights subscriber data showing that Kagan is seeing some payoff in the localization focus. Second-quarter statistics show that subscribers from the U.S. and Canada made up about 56.2% of total subscribers in 2017 compared to just 35.4% in June 2021.

Kagan highlighted increased competition in the streaming space and the difficulty of producing content during the ongoing pandemic as key factors driving increased content spending.  

Kagan noted that the launch of new subscription video-on-demand players, such as The Walt Disney Co.'s Disney+, AT&T Inc.'s HBO Max, Comcast Corp.'s Peacock and ViacomCBS Inc.'s Paramount+, resulted in those players moving content to their own streaming services.. 

With that dynamic likely to continue, Kagan believes Netflix will be putting increased focus on their originals, with $5.21 billion of the $13.60 billion in total amortized costs going to originals in 2021. 

Netflix has been preparing for this trend since entering the originals market in 2012 as it expected studios would eventually hold back programming. By 2014, about 6.8% of spend came from new orders and increased to about 37.8% of the budget in 2020. As the service focuses more on new content, Kagan expects that to grow to 46.5% by 2025.

Kagan defines an original as a production that was ordered by Netflix, including co-productions. This does not include acquisitions that are sometimes marketed by Netflix as originals, Kagan said. 

Netflix also had a significant amount of content ready at the beginning of the pandemic, but production delays affected the latter half of 2020 and persisted into early 2021, Kagan noted. 

The streamer is also putting more emphasis on unscripted programming as those series nearly doubled in 2020, Kagan said. This series replaced production shutdowns on the scripted side but reality fare has also given strong results, including "Too Hot to Handle" with Netflix ordering two additional seasons and producing the format in other countries, Kagan noted. 

On the acquisition side, theater closures left a plethora of films on the table for streamers, with Netflix snagging "The Trial of the Chicago 7" and "Enola Holmes,” Kagan said. 

Netflix has also been ramping up spending on local content and subscriber data indicates the localization efforts are paying off. Second-quarter statistics show that subscribers from the U.S. and Canada made up about 56.2% of total subscribers in 2017 compared to just 35.4% in June 2021, Kagan reported. 

This analysis comes from the “Economics of TV & Film,” a regular series of articles from Kagan that provides exclusive research and commentary. It was published by S&P Global Market Intelligence.

NEW YORK—As cord-cutting and declines in cable network viewing make negotiating carriage deals between operators and programmers increasingly difficult, new research from S&P Global Market Intelligence's Kagan shows that cable networks have lost $179.5 million in affiliate fees since 2013. 

The losses cover cable carriage disputes that resulted in blackouts but were eventually resolved. 

In 2020 alone, cable network companies lost $18.4 million because of these disputes.

The Kagan analysis found that the biggest losses were in 2016, with $37.4 million in cable network affiliate revenue lost. The $18.4 million losses in 2020 were slightly down from $19.0 million in 2019 and significantly down from $31.4 million in 2018.

One of the higher stakes cable cable blackouts in recent years was the dispute between Fox Corp. and Dish Network Corp., which made Fox Sports 1, Fox Sports 2, BTN and Fox Deportes go dark on Dish from Sept. 26 to Oct. 6, 2019, according to Kagan.

The most expensive resolved carriage dispute was a blackout lasting 1,057 days between Viacom and Suddenlink, which cost the networks $38.6 million, followed by a blackout lasting 1,567 days between Comcast’s networks and Verizon that cost $35.3 million.

ViacomCBS suffered the largest revenue loss from these disputes between 2013 and 2020, with $40 million in losses, followed by Comcast’s networks ($35.3 million), Fox ($34.4 million) and the National Football League ($31 million,) according to Kagan

Looking at individual networks, The Weather Channel's 1,567-day blackout on Verizon Communications Inc. registered the largest loss from a resolved carriage dispute since 2013, with more than $31.5 million in lost carriage fees.

The full analysis is available here.  

NEW YORK—Nearly 7.2 million traditional multichannel (MVPD) subscribers opted to cancel their subscriptions in 2020, according to a recent report from Kagan, an S&P Global Market Intelligence media research group.

The 7.2 million combines traditional cable, telco and satellite pay-TV services. According to Kagan, at the end of 2020, only 57% of U.S. occupied households only had a traditional MVPD service. That number is better when combined with a virtual MVPD, with about two-thirds (66.6%) of households having a traditional service and a vMVPD, though that is still down from 2019.

The growth of vMVPD helped mitigate the number of people that dropped live linear channel packages, with 2.7 million new subscribers, but it was not enough to offset traditional MVPDs losses.

MVPD losses did slow in the fourth quarter of 2020, with a total subscription loss of 1.5 million, but vMVPD did not maintain its momentum from the third quarter, per Kagan, netting 223,000.

“[T]he full year decline underscored that the impacts of the pandemic amplified cord-cutting instead of insulating an industry built around home entertainment,” said Kagan.

For more information, visit www.spglobal.com/marketintelligence. 

MONTEREY, Calif.—The content landscape is shifting, as the days of certain channels only being available on specific multichannel platforms are fading. This will factor into the accelerated long-term losses for multichannel services per media research group Kagan.

As more and more OTT services become available from different networks and studios, multichannel video subscriptions are losing the exclusivity of content that they previously held. This leads some consumers to drop the multichannel services in favor of OTT, causing the number of online-only households to rise.

Despite this, Kagan reports that the majority of households (64%) by 2023 will still rely on either traditional or virtual multichannel services for video entertainment. However, the arrow will likely be pointing downward overall.

Kagan forecasts that in 2023 the total traditional multichannel subscriptions will see a decrease of 16.4 million subscribers as well as a dip of traditional residential multichannel households of 15.6 million. Virtual multichannel households are expected to rise by 6.4 million to 13.5 million total, but the combined amount of subscribers for multichannel services is expected to be down overall to 84 million residential subscribers.

Meanwhile, alternative services like OTA is projected to see a rise of 3.8 million to 21 million total, while online-only households could see a bump of 10.6 million to 25.2 million total.

MONTEREY, Calif.—Apollo Global Management’s Cox Media Group and Northwest Broadcasting deals and Nexstar Media Group’s divestiture of 19 stations to win FCC approval of its Tribune Media acquisition helped to propel merger and acquisition activity in the U.S. broadcast market to $5.1 billion, according to Kagan, a media research group with S&P Global Market Intelligence.

The quarterly deal volume, the highest since the second quarter of 2007, was propelled by Apollo’s $3.1 billion purchase of a majority stake in Cox Media, which included 14 full-power and nine low-power TV stations, four radio stations and a newspaper, as well as its $384 million purchase of a majority stake in Northwest Broadcasting, the researcher said.

The other major M&A activity centered on Nexstar divestitures. The company sold a total of 19 stations in 15 markets for $1.32 billion to E.W. Scripps and TEGNA, a move needed to win regulatory approval for its December 2018 deal to merge with Tribune Media.

Gray Television boosted the quarterly deal total by $45 million with its acquisition of two CBS affiliates, WWNY serving Watertown and upstate New York and KEYC-TV serving southwestern Minnesota, Kagan said.

Radio deal volume for the quarter hit nearly $237 million, half of which involved Cumulus Media.

Broadcast television station M&A neared $9 billion in 2018, according to Kagan, a unit of S&P Global Market Intelligence, an 8 percent increase over the prior year.

Topping the list of deals is Nexstar’s pending purchase of Tribune Media, a transaction that will create a 216-station powerhouse. The deal, which also includes Tribune’s WGN America cable network, stakes in Food Network and the Chicago Cubs and more than $2 billion in debt, has been valued at about $6.4 billion. Kagan estimated the broadcast portion of the deal to be worth about $3.5 billion.

Next was Gray TV’s purchase of Raycom Media, completed on Jan. 2. Kagan valued the broadcast portion of that $3.6 billion deal at about $3.4 billion.

Other station deals include Cordillera Communications’ sale of 15 full-power and 8 low-power stations to E.W. Scripps Co. for $521.0 million; Quincy Media’s purchase of Cordillera’s NBC affiliate in Tucson, Ariz. (KVOA) for $70 million and its ABC affiliate in Paducah, Ky.-Cape Girardeau, Mo.-Harrisburg-Mt. Vernon, Ill. (WSIL-TV) for $24.5 million; and E.W. Scripps' purchase of independent TV station WHDT in West Palm Beach-Ft. Pierce, Fla., from Marksteiner AG Inc. for $25 million. 

MONTEREY, CA–Cable and satellite TV providers continue to shed subscribers as the rate of cord-cutting accelerate in the third quarter, according to several new research reports.

According to MoffettNathanson, more than 1 million viewers severed their subscriptions to cable and satellite TV services in Q3, the most ever in a quarterly earnings period. The four largest U.S. pay-TV providers--AT&T (DirecTV), Comcast, DISH and Charter lost 887,000 subscribers in the quarter, with the satellite TV providers taking the brunt of the loss.

Media Research firm Kagan released similar figures, noting that cable lost 1.1 million subscribers year-to-date so far, their worst performance at the three-quarter mark since 2014. Satellite providers lost 726,000 subscribers in Q3 and traditional telco subscriptions fell by 94,000, with Verizon alone shedding 63,000 subs alone during Q3. The current number of multichannel video program subscribers stands at 91 million, including 88.2 million residential customers, according to Kagan.

Kagan’s quarterly analysis now includes total virtual multichannel subscriptions from services such as Sling TV, DirecTV Now, Hulu with Live TV, YouTube TV and PlayStation Vue. The combined virtual platforms gained an estimated 2.1 million subs in the trailing 9 months, compared a decline of 2.8 million in the traditional segment.

Leichtman Research Group reported a loss of approximately 975,000 subscribers for the pay-TV market in Q3 compared to a pro forma loss of 410,000 in Q3 2017. Among “skinny bundles,” LRG focused on those provided by AT&T/DirecTV and DISH, noting that its Sling TV and DIRECTV NOW services added only 75,000 subscribers in Q3, compared to about 530,000 net adds in Q3 2017. This was the fewest in any quarter since their debut.

Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. noted the danger such trends mean for DBS providers in particular.

“Satellite TV services had more combined net losses in 3Q 2018 than in any previous quarter,” he said. “These net losses were largely driven by corporate strategies focused on acquiring and retaining more profitable subscribers (as well as a programming carriage issue between DISH and Univision). A related emphasis on improving the profitability of the satellite TV company’s Internet-delivered flanker brands reduced net quarterly adds in the segment, resulting in vMVPDs not helping to mitigate overall pay-TV losses to the degree they had in recent quarter

In addition to lost subscription revenues, cord-cutting is hitting pay-TV’s advertising base as well. eMarketer recently downgraded its TV ad revenue estimates for 2018, decreasing the rate of growth to just .5 percent to $71.65 billion, down from the previously estimated $72.72 billion. eMarketer predicts that TV’s share of total media ad spending in the US will drop to 34.9 percent, and is expected to fall below 30 percent by 2021.

MONTEREY, CA.–Despite increasing uptake rates by so-called “skinny bundles,” cable and satellite operators continue to see declining subscription rates to their main pay-TV services, according to Kagan.

According to the media research Kagan’s Q2 2018 U.S. Multichannel Subscriber Report, cable, direct broadcast satellite (DBS) and telco multichannel sectors combined lost 860,640 video subscribers in the three-month period ended June 30, 2018, ending the quarter at 92.2 million, down from 98 million the same period a year ago.

While the combined total was less than the loss of 976,000 video subscribers during the same quarter a year ago, DBS logged its second largest quarterly decline on record, losing a combined 478,000 customers, while cable logged its largest second-quarter video subscriber drop since 2015, bringing year-to-date losses to 685,790. The telco video segment improved dramatically during the period however, reducing its losses to just 56,000, or just a fraction of the pattern of quarterly losses established in the last two years, according to Kagan.

The picture for pay-TV operators improves, however, when taking their OTT-based “skinny bundles” into account. DIRECTV NOW and DISH’s Sling TV reduced the quarterly subscription losses by approximately 45 percent, raising the residential figure to 93.5 million.

The residential multichannel penetration rate stood at 75% as of June 30 when including the virtual multichannel services owned by AT&T and DISH Network (DIRECTV NOW and Sling TV).

MONTEREY, CALIF.—The next five years are going to see a surge in households making the move to be broadband-only according to media research group Kagan. An estimated 37.2 million homes are expected to become broadband-only by 2022, just shy of double what the total was in 2017, 19 million.

“A perfect storm of long-term trends including increase in streaming content suppliers, widespread utility-like status of broadband and a demographic shift attributable to shrinking baby boomers and rising millennials, is yielding higher broadband-only home gains than initially anticipated, prompting a significant upward update for our projections,” said Tony Lenoir, senior Kagan research analyst.

Homes that are broadband-only, or have a subscription to wireline broadband, are expected to increase at a 14.4 percent compound annual growth rate from 2017 to 2022. In 2022, Kagan expects 38.4 percent of the combined residential cable and telco wireline broadband subscribers to eschew legacy multichannel distribution and instead rely mostly on a combination of broadband and over-the-air broadcast signals.

An estimated 29.2 percent of U.S. homes are expected to be broadband-only in 2022, while traditional multichannel penetration will likely be in the low 60 percent range.

The full report is available upon request from Kagan parent company, S&P Global Market Intelligence.

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MONTEREY, CALIF.—Broadcast stations were active with merger and acquisitions throughout 2017, with S&P Global Market Intelligence’s Kagan research group reporting a total of $8.24 billion in mergers and acquisitions for radio and TV stations. According to Kagan, this is the highest annual deal volume since 2014 and the third highest since 2008.

Of the $8.24 billion in total deal volume, radio was responsible for $3.21 billion while TV made up $5.03 billion. The top mergers of the year were between Entercom and CBS Radio in February for $2.56 billion and the Sinclair Broadcast Group’s merger with Tribune Media Company for $3.76 billion. Even without these deals, Kagan reports 2017 would have shown growth in both radio and TV deals; 23 percent for radio and 79 percent for TV, excluding Nexstar's merger with Media General Inc.

Kagan’s most recent report also offers insight into the fourth quarter numbers for mergers and acquisitions. In TV, deals reached $500.5 million, with the top deal coming in the form of Tegna’s acquisition of Midwest Television Inc.’s stations in San Diego for $303 million; the deal also included additional fundings for Midwest’s radio stations in the market. Other notable fourth quarter deals included NBCUniversal’s Telemundo Station Group acquiring all stations of ZSG Communications Inc. for $75 million and HC2 Holdings acquiring the Azteca American network from affiliates of TV Azteca SAB de CV for an estimated $33 million.

Radio saw its quarter total reach $248.3 million in deals. The top deal for radio was Merlin Media LLC selling its last two Chicago stations, WKQX-FM and WLUP-FM, to Cumulus Media on a $50 million purchase option. The previously mentioned deal between Tegna and Midwest accounted for $22 million for KFMB-AM/FM. A large part of the quarter’s radio deals also came from station swaps, as Entercom had to divest a number of stations to comply with FCC ownership rules following its merger with CBS Radio. Entercom traded 11 of its stations for seven iHeartRadio stations, one station from Beasley Broadcast Group and $12 million in cash. Kagan estimated the swaps’ total value at $148 million.

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MONTEREY, CALIF.—Despite taking place during the heart of baseball season, the third quarter of 2017 didn’t feature any home-run station acquisitions or mergers, as the $189.6 million in volume was the lowest quarterly volume for the year, per S&P Global’s Kagan media research group. Of course after the first two quarters of the year saw two billion-dollar deals, it would have been hard to match.

A total of $66.6 million of the total deal volume came from the TV market. The top TV deal for Q3 took place in July, when OTA Broadcasting sold its two Palm Springs, Calif., stations to Entravision Communications Corporation for $21 million. Kagan estimates a 7.5x forward seller’s multiple, while Entravision reported a buyer’s multiple of less than 6.5x.

Other deals included EVINE Live selling its WWDP station in Boston to WRNN-TV Associates Limited Partnership for $10 million, as well as a $3.5 million channel-sharing agreement with WMFP. London Broadcasting sold KTXD in Dallas to Cunningham Broadcast Corporation, a marketing agreement partner of Sinclair Broadcast Group, for $9.5 million. Southern California License sold KAZA in Los Angeles to Weigel Broadcasting for $9 million; KAZA had previously sold its spectrum during the Spectrum Incentive auction and entered a channel-sharing agreement with Venture Technologies Group’s KHTV-CD. All other TV deals in Q3 registered $6 million or less.

The Kagan graph on TV deal volume through Q3 shows 2017 is already well beyond the results of 2015, and has a chance to surpass that of 2016.

Radio contributed a majority of the deal volume, accounting for $123 million. Nearly 50 percent of that came from the Educational Media Foundation acquisition of three FM stations Entercom Communications had to spin off after its merger with CBS Radio; Educational Media Foundation paid $57.5 million for the stations.

The second largest being a sale of four AM and 14 FM stations and two FM radio translators from Alpha Media to Dick Broadcasting Company for $19.5 million; all the stations are located in markets in Georgia and the Carolinas. There were 10 other radio transactions between $1 million and $7 million; all other radio deals in Q3 were less than $1 million.

According to a graph from Kagan, deal volume for radio through three quarters is already higher than the last five years total.