Gloomy Forecast for US Cable Network Ratings

26 August 2004

It's bad news for US cable companies as top media analyst Tom Wolzien reveals his prophecies for the next ten years.

Perusing the latest viewership ratings study from Nielsen Media Research, Wolzien suggests that cable networks' growth will plateau by 2009, after which the industry looks set for decline unless it begins to address the issue of improved programming.

Wolzien believes cable companies will achieve 57% of market share in prime-time viewing by 2009, up from 43% in 2000, but then stabilize and gain just 54% in total cash flow over the next five years. In contrast, he expects broadcasters to increase cash flow by 613% after 2009.

He cites findings that the top fifty-one cable networks failed to gain market share among subscribers from 2000 to 2004, instead growing through increased availability.

But quality not quantity is what counts, according to Wolzien, who stresses the need for cable companies 'to put better programming on the screen' and 'get their audiences the old-fashioned way.'

The views of Wolzien – a senior analyst with investment research and management firm Sanford C Bernstein – are usually held in high esteem, but unsurprisingly have been poorly received by the cable industry, already suffering the loss of subscribers to US satellite firms [WAMN: 05-Aug-04].

Cable channel Court TV ceo Henry Schleiff hit back at Wolzien: "It's off target. Cable networks are increasingly able to invest in their own programming. And they're growing."

The National Cable & Telecommunications Association agrees that 'investment is paying off', after its members increased spending on programming last year from $9 billion (€7.4bn; £5bn) in 2000 to $12.6bn.

But Wolzien has the final word with a warning about future outside investment in cable if networks' spending is not matched by increased popularity and profit. Investors, he asserts, will expect to 'pocket the earnings growth.'

Data sourced from: USA Today; additional content by WARC staff