New York -- Despite it being what she called one of the darkest periods for media in recent history, Bank of America Merrill Lynch senior media and entertainment analyst Jessica Reif said there is still plenty of room for growth for cable operators at the NextTV Summit here.
While the video segment has been pressured by intense competition from over-the-top and subscription video and demand players -- cable video penetration is around 30% of homes passed, she said -- there is still ample room to grow the broadband segment.
There is no doubt that the video landscape has changed dramatically -- Reif said we are in probably the “bleakest period for media we’ve ever seen.” But broadband penetration is still under 50% and there are opportunities in wireless and commercial services.
Scale, however, remains critical, as is evident by recent mega deals in the programming space -- AT&T’s purchase of Time Warner and The Walt Disney Co.’s buy of 21st Century Fox assets.
Reif said the latter deal -- Disney Fox -- shook the industry in that it showed that one of the industry’s founders -- Fox executive chairman Rupert Murdoch -- saw the need for a dramatic transformation of his business from linear entertainment to live sports and news.
“He saw the handwriting on the wall. That’s why everyone went into internal introspection -- do we buy or do we sell?” Reif said.
Scale doesn’t just mean increasing your domestic bulk. Reif added that today’s media giant needs to be global, adding that she believes Comcast would have been “marginalized” had it not won the auction for British satellite giant Sky.
“You need to be able to deliver content in many, many ways,” Reif said.
While Netflix appears to be the model every programmer is chasing, Disney’s 2019 direct-to-consumer offering -- chock full of Disney, Pixar, Marvel, Star Wars and Fox content -- and other DTC offerings to come could chip away at that dominance if that content were to be removed from the SVOD pioneer, Reif said.