A Kagan Research analysis showed that total cable-network revenue was up 12.7% to $29.9 billion last year, trailing slightly behind the growth rate of 13.6% posted in 2004, due in large part to continued softness in affiliate revenue.
Data from Kagan’s annual survey of network executives is in the current edition of Benchmarking Cable Network Financial Statistics. According to the study, the national advertising market looks healthy, but affiliate revenue is starting to slow and networks will likely see more growth in CPMs (cost per thousand homes) than in annual license fees.
Network executives expect a rebound in 2006, and Kagan projected that revenues will reach $33.8 billion, or 13.1% more than 2005.
"The results of our study show that revenue at most major cable networks has been growing at a rapid clip," Kagan senior vice president Derek Baine said. "Continuing to lead in terms of total revenue, ESPN took in $3.7 billion in 2005, $2.1 billion more than its nearest competitor. Nickelodeon, TNT, FSN, MTV and USA all topped $1 billion in revenue, while 10 other networks had revenue greater than $500 million."
Other relevant estimates from Benchmarking include:
• License fees for networks owned by media conglomerates will continue to rise on an annual per-subscriber basis of 2%-5% per year;
• MSOs and direct-broadcast satellite operators will continue to shuffle their channel lineups, dumping networks (even established ones) with licenses fees considered to be excessive in light of their ratings;
• Media conglomerates will have a difficult time launching new spinoffs, even with leverage of other networks and retransmission consent;
• Independently owned networks will find it almost impossible to get carriage without the backing of a major multichannel operator; and
• Barring a recession, ad revenue will remain in double-digit growth territory for the foreseeable future.
Benchmarking provides financial metrics on more than 100 cable networks, including tiered digital networks.