MediaFile

TV Content wars, blackouts could spur M+A

Dish customers: No 'Breaking Bad' for you! (Photo: Reuters)

 

Evercore analyst Bryan Kraft believes the prolonged blackout that has left DirecTV’s 20 million subscribers without MTV, Comedy Central or Nickelodeon for a week, could lead to some industry consolidation.

In a research note out late Wednesday night, the analyst said if content providers Viacom, as well as home of ‘Breaking Bad’,AMC, which was dropped from No. 2  satellite provider Dish Network in July, get the upper hand, it raises the chances of a merger between satellite companies and cable providers.

If DirecTV and Dish comes out the winners, he said, it encourages cable TV networks to merge, but only when their valuations fall. DirecTV has pushed backed against what it claims are exorbitant increases in Viacom’s programming fees that it says it does not want to pass on to customers.

And DirecTV viewers aren’t the only ones suffering. Kraft estimates that the dispute is making Viacom lose about $14 million a week. Meanwhile DirecTV would need to lose 1.15 million subscribers before its cash flow was impacted. Kraft said that if DirecTV expects to lose more than 1.15 million subscribers, it should pay up the $3 per subscriber fee Viacom is likely seeking.

As one of the most high profile blackouts stretches into its second week, time will tell whether the spat will be the one that changes the pay TV landscape for good or whether it just causes viewers to change the channel.

Netflix: The New Arch-Frenemy

Albanian Army marching in Tirana's main square (Photo: Reuters)

 

The Albanian Army is coming everyone, watch out!

We’re only into week 1 of big media companies reporting their quarterly earnings and the most prominent name hasn’t been CBS Corp, Time Warner Inc, Comcast Corp, and Viacom — instead it’s all been about Netflix.

Pretty much on each of these companies’ conference calls, the $4 billion company from Los Gatos, California was a key reason for a boon to the bottom line by supplying  ’found money’ by digital licensing of shows that would have been gathering dust on a shelf somewhere in Hollywood. But also on the calls for several of the same companies, Netflix was seen by analysts as a threat to their future. Let’s not forget the four who reported this week have combined market value of over $160 billion.

At CBS on Tuesday, which most people see as a broadcast and billboards advertising company, the first quarter was given a nice bump from its licensing of old CBS shows like”‘Cheers” but also by newer cable shows like Showtime’s “‘Dexter” and “Sleeper Cell”. Here’s the ever ebullient CBS CEO Les Moonves telling analysts on Tuesday how great Netflix and other copycats are:

Viacom chief Dauman plays down Nickelodeon ratings dip, sees more ads

Viacom CEO Phillipe Dauman

Viacom Chief Executive Phillipe Dauman tried to play down the Nickelodeon surprise double-digit ratings drop in September as a Nielsen glitch which is being worked on and would not impact the upcoming quarter.

Dauman, speaking at a UBS Media and Technology investment conference, expressed his frustration at the issue but said there was little that could be done about it at this stage. He said “Nielsen is the only game in town”.

He described the timing as unfortunate coming in the crucial September quarter ahead of the holiday season.

Are kids wringing out SpongeBob?

Back in September, right before the quarter ended, Viacom trimmed  its advertising revenue outlook to high single digit growth from double digit growth. One of only a few media conglomerates to take that step–News Corp, Time Warner, and CBS were much more upbeat–the move prompted some concern among media watchers that advertisers were beginning to slash their budgets on macro-economic concerns.

But that wasn’t the case. It turns out the problem was Viacom specific. As the Sumner Redstone-controlled company disclosed during its fiscal fourth quarter results Thursday, domestic advertising revenue growth slowed in part because of a mid-September ratings plunge kids network Nickelodeon. Total domestic ad revenue across Viacom’s cable networks, which also includes MTV, VH1, and Comedy Central, for FQ4 was up 7 percent versus the third quarter’s climb of 12 percent.

What’s more is that Viacom CEO Philippe Dauman threw audience measurement company Nielsen Co under the bus on Thursday’s earnings call, saying the  ratings drop at Nickelodeon was “inexplicable.” He said Nielsen’s data did not match Viacom’s own set top box data for viewers. The company is currently in discussions with Nielsen– the dominant company that tracks TV ratings that determine ad rates — and the watchdog organization Media Ratings Council to resolve the situation.