NEW YORK Despite a challenging advertising market, cable networks will post 4.4 percent revenue growth in 2009, hauling in some $44 billion in ad sales and affiliate dollars, per a new SNL Kagan study.
While the gains will be muted when compared to last year’s 9.4 percent growth ($42.2 billion), there are signs that 2009 will be remembered as something of an aberration, said Derek Baine, senior analyst at SNL Kagan.
“It’s likely to be just a blip in the long-term growth of an industry that has increased revenue at a CAGR of 12.6 percent over the past decade,” Baine said, who noted that few industries can boast that kind of performance, especially in such a tempestuous economic environment.
Since 2002, affiliate fees have accounted for the greater part of cable’s overall revenue mix, taking some of the onus off the ad sales side of the ledger. Last year, net advertising dollars contributed to roughly 42 percent ($17.8 billion) of the total revenue figure, while carriage fees added up to about $22.8 billion, or 54 percent of the whole. (The 4 percent remainder was chalked up to unspecified “other” income.)
The list of big earners roughly coincided with ratings prowess, as ESPN boasted the biggest ad haul of 2008, taking in $1.65 billion in gross ad revenue, an increase of 4.6 percent vs. the prior year’s $1.57 billion. Nickelodeon notched second with $1.21 billion, up 0.9 percent from 2007, while USA Network claimed third with $941.5 million in sales, an increase of 6.1 percent year-over-year.
Per Kagan, the top 10 rounded out thusly: MTV took fourth place with $927.6 million in gross ad revenue, a drop of 10.9 percent versus the prior year’s haul; TNT posted $883.6 million in ad sales (up 6.4 percent); TBS took in $846.2 million (up 7.8 percent); Lifetime notched a 5.3 percent improvement with $711.9 million; Fox News Channel jumped 23.4 percent in the election year to $667.7 million; CNN leapt 28.2 percent to $654.5 million; and Scripps Networks’ HGTV finished the year with $547.8 million in ad sales bucks, up 5.6 percent.
Despite securing relatively small gains this year, Kagan anticipates a rebound for cable in 2010. The researcher sees total revenue topping off at $47.6 billion, an increase of 8.1 percent over this year’s haul. Net ad revenue will account for $18.2 billion, or 38.2 percent of the total, while affiliate fees will add up to $27.7 billion, or 58.2 percent of the whole.
While Kagan expects cash flow will inch up a mere 2.5 percent to just under $16 billion in 2009, next year should see a marked recovery on that score, with an estimated growth of 9.2 percent to $17.4 billion. In 2011, Kagan sees cable cash flow jumping another 10.7 percent year-over-year, to $19.3 billion.
“The exceptional performance of the industry is most evident in the networks’ healthy cash flow margins, which averaged 36.9 percent in 2008,” Baine said. “By 2013, we estimate half of all networks will exceed 40 percent.”
Nielsen Business Media