Content On Demand Killing Cable IndustryAd-spending growth on U.S. cable-television networks is likely to slow in the second half of the year and into 2009, media research firm SNL Kagan predicted Tuesday.
In recent weeks, several cable-network groups have reported double-digit ad-revenue growth in the first half of 2008, bucking the weakness in the rest of the ad market. In part, TV advertisers have been saving money by shifting dollars from broadcast to cable networks, which cost less. "But that can't go on forever," says Derek Baine, a senior analyst at SNL Kagan. "Cable networks are already seeing demand slow, and that trend will likely continue and get worse as broadcast networks roll out their fall season."
Kagan projects economic weakness will cut cable ad-revenue growth to 10.4% in 2008 and 4.7% in 2009. In 2007, cable networks saw ad revenue jump 10.5% to $19.4 billion, and total revenue, which includes subscriber fees, grew 12.6% to $37.9 billion, according to the report, which relies on interviews with cable executives and historical trends.
Over the next several years, Kagan projects that total cable-network revenue will grow at an annual rate of 8.9%, slower than the 12.6% compound annual growth in the past five years. While advertising will recover somewhat, the firm projects that subscriber fees, which represent a growing share of cable-network revenue, will grow only 9.5% a year in the next decade, compared with 16.1% annual growth in the past 10 years.
By: Same Schechner
Wall Street Journal; August 13, 2008
