Credit rating agency says broadband demand will outpace video losses

Moody’s Investors Service said its outlook for pay TV in 2019 is “positive,” with broadband demand and margin growth expected to outpace video subscriber losses.

“Growing broadband demand will drive more than 4% EBITDA growth among U.S. pay TV providers over the next 12 to 18 months, despite threats posed by consumers’ shift to OTT and 5G wireless broadband deployment," said Moody’s VP and senior credit officer Jason Cuomo in a statement.

For broadcasters, rising retransmission consent fees and increased M&A should help lessen the blow from ad revenue declines as advertisers shift their focus to digital. Moody’s said its outlook for broadcast TV in 2019 was “stable.”

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In its report, Moody’s predicted that retrans revenue would rise 13.9% to nearly $5.5 billion in 2019, from $4.9 billion in 2018.

“Rising retransmission fees and incremental earnings generated by a strong 2018 political cycle will help offset weak advertising revenue for U.S. broadcasters, leading to 3.1% EBITDA growth in 2019," Cuomo said in a statement.

But the picture isn’t so bright for newspaper and magazine publishers. Revenue is expected to continue its downward trend in the sector as more and more consumers turn to alternative means to get their information. According to Moody’s VP and senior analyst Alina Khavulya, consolidation and cost rationalization will continue.

“U.S. newspaper and magazine publishers will continue to be challenged in 2019 by the persistent decline in ad demand, as reading habits continue to shift towards social media news sources, search engines and digital video," Khavulya said in a statement.

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