Merrill’s Reif Cohen Is Bullish on Content

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With demand for content at an all-time high,
advertising revenue rising at a healthy clip and the emergence
of international markets, there has never been a better time to
be in the content business, Bank of America Merrill Lynch media
analyst Jessica Reif Cohen said at the OnScreen Summit.

“I don’t think the TV production business has ever been this
healthy,” Reif Cohen said in an interview with Multichannel
editor-in-chief Mark Robichaux. “There is massive demand
for content both domestically and abroad.”

Reif Cohen called the outlook much different from 2009,
when a decimated economy helped drag down the global advertising
market. The difference in the past few years has been
the emergence of cable as a significant buyer of content and
the substantial growth of international TV markets. She added
that while broadcast advertising has dominated internationally,
advertising dollars have shifted as cable penetration
has risen.

Technology has also played a role, Reif Cohen said. Videoon-
demand and online distribution have increased the value
of hit shows by about 50%, to $1 billion.

While content creation is enjoying its day in the sun, distribution
has taken it on the chin with increased competition and
the emergence of online outlets like Netflix.

Reif Cohen praised cable operators for losing fewer video
customers than in the past — and for introducing economy
packages for cash-strapped customers.

As for broadcasters, Reif Cohen said retransmission-consent
revenue has saved the industry. And with reverse-compensation
payments from affiliate stations beginning to trickle in,
the outlook appears good.

“The reason we like broadcast networks is that we see visible
payments from pay TV of between $400 million and $800
million over the next four to five years, per network,” Reif Cohen
said. “Those are very significant dollars.”