Media Industry Shifts: Cable Networks Gain Ground

Strategic Insights -

The TV broadcast industry is undergoing a significant shift, with cable networks increasingly gaining ground against traditional broadcast networks. Richard Greenfield, Co-Head of Fundamental Equity Research at BTIG LLC, explains that this shift is driven by the improvement in content quality on cable networks, making them more attractive to viewers and advertisers. Despite CBS being the top-rated broadcast network, cable networks are making significant inroads, with companies like Disney and Viacom benefitting from this trend.

Key Takeaways:

  • The cable networks are making big inroads against traditional broadcast networks, driven by the improvement in content quality.
  • CBS is still the top-rated broadcast network, but its lead is being threatened by cable networks.
  • Disney and Viacom are among the companies benefitting from the shift towards cable networks, with improving content quality driving stock performance.
  • The global economy is a bigger driver of performance for media companies than the lineup and overall TV business.
  • The importance of television and primetime lineups is decreasing as these companies diversify into other areas such as cable networks, studios, and publishing.
  • Time Warner is undergoing a significant transformation, having shed its cable and internet businesses and focusing on pure play cable networks and film.

Statistics:

  • Cable network programming is getting better and better, taking more and more viewers away from traditional TV broadcast (Source: Richard Greenfield, BTIG LLC).
  • CBS has been in the lead from an 18-49 demographic (Source: Richard Greenfield, BTIG LLC).
  • Disney's content is improving, with movies like "Iron Man," "Toy Story 3," and "Tron" performing well (Source: Richard Greenfield, BTIG LLC).
  • Viacom's content is also improving, with shows like "Jersey Shore" and "Teen Mom" attracting large audiences (Source: Richard Greenfield, BTIG LLC).
  • Time Warner has stripped out its struggling internet business, AOL, and its huge cable business, focusing on pure play cable networks and film (Source: Richard Greenfield, BTIG LLC).

Sources:

  • Richard Greenfield, Co-Head of Fundamental Equity Research, BTIG LLC, in an interview with Ken Prewitt, Host, Bloomberg News, on May 20, 2010.