Sanford Bernstein media analyst Todd Juenger took another deep dive into the international programming market, issuing a “blackbook” Wednesday that takes a detailed look into the Latin America region. His conclusion: international programming will be the “single biggest factor separating winners and losers over time in large-cap media.”
Juenger, always a big proponent of the potential of international programming, took the concept a step further, adding that he believes international pay television markets will grow for years to come, while the U.S. will only get worse.
Latin America tops his list as the most lucrative international pay TV market – he estimates that pay television subscribers will grow at an 8% annual clip for the next five years, with advertising revenue doubling that pace.
The top programmers internationally, according to Juenger are Discovery Communications – which has said that 2014 will be the first year that international revenue exceeds domestic sales – 21st Century Fox and Time Warner Inc.
Juenger estimates that the three networks will grow revenue at between 11% and 12% annually over the next five years, well ahead of their peers because of the investments they have made in the region over time, including securing channel positions in basic tiers, which are no longer available to competitors.
“That investment has paid off in the form of better distribution (more networks, in the most popular tiers, with better channel positions) across the fastest-growing tiers and countries in the region,” Juenger wrote.
AMC Networks, Scripps Networks and Viacom will have a rougher go of it internationally, according to Juenger, mainly because they were late to the game. But there is room for growth, especially as consumers trade up to more expensive tiers as they become more affluent. But that, Juenger wrote, “is a long way off.”
Still, those programmers are playing close attention to the international market. AMC acquired European programmer Chellomedia from Liberty Global for about $1 billion earlier this year, which should boost its presence on that continent, but it as a small presence in Latin America. Viacom, whose Star India is one of the most popular networks on the sub-continent, also has just a few channels in Latin America, but is working to boost that presence. Viacom recently acquired a free-to-air network in Brazil that it is converting to pay TV, which should help grow its affiliate revenue and advertising clout in that top Latin American market.