Analyst: “TV Industry consolidation inevitable”
May 31, 2023
Analysts at SVB MoffettNathanson (MN) recently held their first Media & Internet TMT Conference with a heavyweight portfolio of expert speakers.
The consensus was that the broadcasting industry were “relatively optimistic” for advertising demand in the CTV, AVoD and sports-led linear segments. However, speakers were asked about the impact from some network programmers who ‘cheat’ the pay-TV system “leaking content over the top to their own, lower-priced Direct-To-Consumer services” and whether they will eventually be punished by MVPDs/vMVPDs.
MN says: “Our conversation with YouTube CEO Neal Mohan, as well as Comcast’s purchase of a Peacock-exclusive NFL playoff game, suggest that these players will avoid the worst-case scenario of being dropped from the bundle altogether, thus making it more likely that ‘non-cheaters’ (ESPN, Turner, Fox) will offer more of their exclusive content over the top in short order.”
However, MN added that Apple, Amazon, YouTube and even Netflix would end up taking more premium sports. “This, in turn, will diminish the value of the linear bundle, accelerate cord-cutting and call into question our thesis of a 50 to 60 million household US pay-TV floor.”
As to the future of media, the MN analysts stated: “Many of our speakers shared our view that industry consolidation is inevitable. We expect heightened pressure from the macro backdrop combined with secular headwinds to lead to discussions about what the path will be for some companies to get to the other side of this tough period. The constant hope is that a white knight emerges as the saviour for media companies under the greatest pressure or some combination of media companies in a similar position to lean on cost synergies as an offset to the revenue declines. However, it still doesn’t sound to us as though any significant deals are imminent, especially in the current regulatory environment.”
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