Jon Lafayette

Craig Moffett: New Government Data Shows U.S. Broadband Market Saturated

"The single most critical question facing cable investors is what happens to broadband subscriber growth from here," said Craig Moffett, the influential principal and senior analyst at MoffettNathanson. "If the problem facing cable broadband today is saturation, then subscriber growth likely flatlines from here.

Analyst Asks If Cable Is a Good Business and the Answer Doesn’t Mention TV

Top cable industry analyst Craig Moffett issued a report with a provocative title, asking, “Is cable a good business?” Clearly, MoffettNathanson’s principal and senior analyst believes Wall Street doesn’t think so.

NextGen TV is Being Used to Deliver Remote Learning in Washington DC

The new TV broadcast technology, known as NextGen TV or ATSC 3.0, is being used to deliver remote learning services to kids in Washington (DC), who might not have access to traditional broadband.

Scripps Goes National By Buying Ion for $2.65 Billion

Local TV broadcast station owner EW Scripps is jumping into the national television business by buying Ion Media for $2.65 billion in a deal backed by Warren Buffett’s Berkshire Hathaway. Berkshire Hathaway is investing $600 million in Scripps to help pay for Ion and make a bet on free over-the-air television. Scripps already had a national presence with Katz Networks, which runs channels like Bounce and Court TV. Ion reaches 96% of US homes with stations in 62 markets and 124 affiliated stations.

Comcast Says It’s Considering Richer Offer for Fox Assets

Comcast confirmed that it is considering an offer for assets of 21 Century Fox that would top the amount Disney has already agreed to pay. Comcast said it is “in advanced stages” of preparing an offer and that any offer for Fox would be all-cash and at a premium to Disney’s $52.4 billion bid, which is based on stock. “While no final decision has been made, at this point the work to finance the all-cash offer and make the key regulatory filings is well advanced,” Comcast said.

Analysts Say Turner Arbitration Offer Blunts Government's Objections to AT&T-TW Deal

Analysts say AT&T’s declaration that it would offer distributors arbitration when Turner carriage deals expire—and its promise of no blackouts for seven years—if its acquisition of Time Warner goes through answers one of the government's biggest objections to the deal. AT&T disclosed the offer in response to the Justice Department’s suit looking to block the merger on antitrust grounds.  MoffettNathanson Research analysts Craig Moffett and Michael Nathanson called AT&T's arbitration and no-blackout gambit clever.

CSN Chicago Winds Up to Air Original Cubs Documentary

CSN Chicago plans to air an original documentary about Game 7 of the 2016 World Series, in which the Chicago Cubs beat the Cleveland Indians in extra innings to win their first championship in 108 years. The documentary, Reign Men: The Story Behind Game 7 of the 2016 World Series, will air March 27 at 9:30 pm CT.

Tribune Sells Gracenote to Nielsen for $560 Million

Tribune Media Co agreed to sell Gracenote, which provides media and entertainment metadata, to Nielsen for $560 million.

Gracenote provides reference information for more than 12 million movie and television listings and 200 million music tracks. It is the industry standard for automatic content recognition technology. Combining Gracenote with its measurement framework, Nielsen expects to be able to provide clients with deeper analytics on consumer behavior and offer a better view of audience engagements. “Gracenote’s metadata and content recognition technology fuels the interfaces of the major video, music and in-car infotainment systems that consumers engage with every day. This acquisition provides Nielsen with a significant asset in our mission of measuring and understanding consumer behavior,” said Karthik Rao, president, Expanded Verticals at Nielsen. Tribune acquired Gracenote in 2014. Tribune Media expects to receive approximately $500 million in after-tax proceeds from the transaction, the majority of which will be used to repay existing debt with the remainder to be reinvested in the business. The sale is expected to close during the first quarter of 2017.

Comcast Launching Two New Hispanic Networks

Comcast, which agreed to launch a series of independent and minority-owned networks to get its acquisition of NBCUniversal approved, said it will be distributing Hispanic-oriented Primo TV and Kids Central when they go on the air in January. With Comcast’s backing, the new networks will try to get other cable operators to carry them. Comcast will pay an undisclosed sub fee to the networks. A precise number for how many homes will get the channels was unavailable. Kids Central, an English-language network aimed at bicultural Hispanic viewers ages 3-7, is owned by Condista Networks. In primetime, the network will have a block of programming aimed at families.

Kids Central will provide both English and Spanish-language video on demand content. Primo TV is an English-language network designed to appeal to bicultural Hispanic viewers ages 6 to 16. It is owned by V-Me Media, which already programs networks including V-Me and V-Me Kids. Programming will feature animated shows, adventure programming and series emphasizing science, technology, engineering and math, or STEM.

Bewkes: AT&T-Time Warner Merger Creates Advertising Competition

Facing the prospect of a lengthy review of its acquisition by AT&T, Time Warner CEO Jeff Bewkes said the transaction would spur consumer choice and competition in the digital advertising industry. Speaking on Time Warner’s earnings call with analysts, Bewkes said that both companies are committed to meeting the conditions necessary to clear regulatory hurdles and close the deal. But Time Warner believes the vertical merger is pro-competitive.
Bewkes noted that the digital advertising business has become increasingly concentrated, with Facebook and Google gaining big and growing shares of that market. The combination of AT&T and Time Warner would be able to offer advertisers more choice and new ad options that could prove to be more efficient and effective. “It has great benefits for advertisers because it gives them more effective advertising and it gives them more competition in advertising,” he said.

AT&T-Time Warner Merger Could Impact Disney’s ESPN

The creation of a new media giant with the acquisition of Time Warner by AT&T could cause strategic challenges for Disney and its ESPN unit, according to a new analyst report. Omar Sheikh of Credit Suisse notes that AT&T-Time Warner will have significantly larger earnings and cash flow than Disney. It will also have more than 50 million direct customer relationships in the US alone. “This will confer an enhanced ability to bid for sports rights from 2021 onwards, and thereby put pressure on Disney to invest further in ESPN’s direct to consumer distribution capabilities,” Sheikh said.

AT&T owns DirecTV, which has had to spend aggressively to keep its exclusive Sunday Ticket deal with the NFL. Sheikh suggests that Disney could grow by buying Twitter or Netflix, the companies it has been linked to recently. Or it could build its own capabilities. “We believe the organic option would be significantly less costly and give Disney the opportunity to tailor new services around its own IP,” he said. Credit Suisse continues to rate Disney stock “Outperform,” but Sheikh has lowered his earnings forecast for 2017. He cut his 2017-18 forecast 2%-4% to a range of $6 to $6.79 per share from $6.13-$7.09 a share. The cuts were driven by double-digit reductions in expectations for Disney’s cable networks and its consumer products group. He also cut his target price for Disney stock to $125 from $128.

Nielsen Universe Rises To 118.4 Million Households

Nielsen’s estimate of the number of TV homes in the US for the 2016-17 is 118.4 million. That figure is up 1.7% from 116.4 million home estimated before the 2015-16 season, which was little changed from the prior year. The number of people age 2 and up in those U.S. households is 201.7 million, up 1.6% from last year, Nielsen estimates. Increases in U.S. Hispanic, black and Asian households were also seen, the ratings company said. A year ago, people 2-plus, was up 0.3% The percentage of total U.S. home with television receiving traditional TV signals via broadcast, cable, satellite or telco, or having a broadband Internet connection is currently at 96%, up 0.8% from last year, but still down slightly from the 2014-15 season.

Univision Sues Charter Over Post-Merger Rates

Univision said it filed a breach of contract lawsuit against Charter Communications claiming that rather than negotiate a new carriage agreement, Charter is attempting to impose rates and other terms of Univision’s agreement with Time Warner Cable, which was acquired by Charter. In papers filed at the Supreme Court in New York, Univision also claims that in government filings and public statements that Charter would be the continuing business after the merger and that Charter is acting in bad faith by enforcing Time Warner agreements in Charter cable systems.

Univision’s carriage agreement with Charter expired June 30. At the time of the merger in May, Time Warner Cable was larger than Charter and received more favorable terms from programmers such as Univision. Univision says Charter “has outright refused to negotiate a renewal agreement with Univision.”

GroupM Sees Global Ad Spending Growth

Global advertising spending will rise 4.5% in 2014 and another 5% to $580 billion in 2015, according to a new forecast from media agency holding company GroupM.

The 2015 level of ad spending would exceed the previous pre-financial crisis and recession peak of 2007-2008 adjusted for inflation. In the US, GroupM sees spending rising in 2014 and 4.2% in 2015. TV spending is expected to rise 3% to $79.1 billion in 2014 and increase 4% to $81.9 billion in 2015.

NBC Stations Get Data from Rentrak

Rentrak said it signed a multi-year agreement with the NBC Owned Television Stations to provide audience measurement and other data for three of its stations.

KNBC in Los Angeles, KXAS in Dallas-Ft. Worth and WTVJ in Miami will use Rentrak data, including single-source information about automotives and political advertising, to demonstrate the value of its inventory to reach customers.

Election Spending To Hit $8.3B, Says Borrell

Political advertising is expected to reach $8.3 billion in 2014, according to a new report from Borrell Associates.

Borrell says that two thirds of that money will be spent between July 1 and Election Day and that the bulk continues to go towards traditional media, rather than digital outlets.

Borrell says that candidates and political organizations will spend $37 per voter in 2014, up 9% from the last mid-term election. It expects spending to jump to $51 per voter in 2016, up 21% from the previous presidential election year in 2012.

Media Mergers? Analyst Makes The Case for Multiple Deals

The media business has been anticipating mergers on the programming side since Comcast agreed to buy Time Warner Cable.

In a new report, analyst Todd Juenger lays out a bunch of potential combinations and looks at their pros and cons. The major advantages would be increased leverage to grow affiliate fees as distributors consolidate, added international exposure and chances for cost savings by combining assets such as studios with networks.

Viacom Motion To Dismiss Cablevision Suit Denied

Federal Court denied Viacom’s request to dismiss a suit by Cablevision Systems that charges the programming for antitrust violations in the way it bundles its cable networks.

In the suit, filed in February 2013, Cablevision charged that Viacom was forcing it to carry and pay for 14 low-rated networks in order to carry popular channels like Nickelodeon, MTV and Comedy Central. The cable operator also claims Viacom is unlawfully block-booking in the way it sells its channels.

“We are gratified the Court has ruled that Cablevision has stated a valid antitrust claim against Viacom for illegal channel tying,” Cablevision said. “We continue to believe that Viacom’s tying of its popular networks to carriage of its lesser-watched ancillary networks is illegal, anti-consumer, and wrong. We look forward to further pressing our case at the next stage of the proceeding.”

The ruling was made by the US District Court for the Southern District of New York.

CBS’ Ianniello Says Shift To C7 Rating ‘Makes Sense’

A top CBS executive crowed about an agreement with GroupM to do ad deals using the C7 measurement scheme, but other media buyers said the deal wouldn’t affect their willingness to shift from the old measurement system.

CBS COO Joe Ianniello acknowledged reports that CBS had an agreement with the biggest media agency to do deals based on C7, which includes more viewers watching ads on a delayed basis.

“I think that [C7] is now going to become the standard. It only makes sense,” Ianniello said. “There is significant viewership outside of the first three days, and we think it’s fair that we get paid for it. I think you’re going to see more and more of these types of deals.”

Ianniello reiterated CBS’ estimate that counting more delayed viewing represented a “nine-figure” revenue opportunity. Ianniello said that the switch to C7 will highlight the disparity in viewing between CBS and its cable competition. He said that CBS would be focusing on generating ad dollars by using C7 for ad buys of primetime programming, or if some advertisers want to stick to C3, by selling those delayed impressions using dynamic ad insertions.

Nielsen Says Biggest TV Watchers Do 50% of All Viewing

A new study by Nielsen finds that a small group of viewers watch way more than their share of TV. Nearly 50% of all TV watching is done by 20% of TV viewers.

These heavy TV viewers spend an average of 705 minutes a day in front of the tube, or almost 12 hours. Since 2009, heavy viewers have increased their TV viewing by 8%, or about a half hour a day.

Analyst Sees Station Mergers Affecting Reverse Compensation

The wave of TV station consolidation that is driven in part to extract larger retransmission payments from cable and satellite operators, might also help broadcasters push back against network demands for reverse retransmission payments.

In a new report, analyst Michael Nathanson of MoffettNathanson Research says that retransmission payments to the Big Four broadcasters has increased seven-fold to more than $1.5 billion over the past five years. The network’s owned and operated stations command much bigger retransmission payments than other affiliate owners.

Nathanson estimates that Fox stations got retransmission payments of $1.01 per home in 2013. CBS' stations got 90 cents, NBC’s got 87 cents and Disney’s generated 83 cents, he figures. Non-O&O station groups earned retransmission payments ranging from almost $1 for Nexstar to 25 cents for Tribune. Getting fees closer to what the O&Os get is one factor driving station mergers.

But the networks are looking to grab a piece of their affiliates growing retransmission fees. “By most accounts, the expected rate of reverse retransmission payments for a Big Four station in one of the Top 100 markets is between $0.50-$0.75 per subscriber, which would mean that station owners would be forking over a majority of their own current retransmission payments,” Nathanson says in the report.

Google Says Digital Activity Impacts Television Viewing

Google and YouTube say they have a significant impact on television viewing.

At a time when Twitter and Facebook are scrambling to get closer to TV networks and their advertisers, Google says in a new research report that 90% of TV viewers also visit Google and YouTube and that online behavior is a clear indicator of a show’s popularity.

“In an effort to identify how digital has impacted viewer behavior in this new era, we analyzed search queries, video views, and engagement metrics from a sample of 100 cable and network television shows,” Google said. The results of the study have been published in a report called The Role of Digital in TV Research, Fanship, and Viewing.

“Digital platforms have fundamentally changed the way that TV viewers research, participate in and access their favorite shows. Search, video and engagement activities, which show a positive correlation to viewership, can provide additional insight into a show’s popularity,” according to the report. TV related searches on Google have grown 16%, and on YouTube, TV related searches are up 54% from 2013.

NBCU’s Upfront Pitch Puts Assets ‘All Together’

The pride is back in the peacock. NBCUniversal CEO Stephen Burke invited the press up to its headquarters at 30 Rock to do a little pre-upfront boasting about how well the NBC broadcast network is doing among the 18-49 year old viewers that are so important in winning the ad sales game.

On the chairs in the conference room were a set of charts and graphs showing NBC as No. 1 with Today, Nightly News, primetime, The Tonight Show Starring Jimmy Fallon and Late Night with Seth Meyers.

“That’s the grand slam of network television,” Burke said, adding that NBC was going into the upfront “in better shape than we have been for a decade.” CBS CEO Les Moonves, no shrinking violet, has been predicting at financial conferences that he expects his network to lead the broadcasters in volume and price increases. But Linda Yaccarino, NBCU’s aggressive ad sales president, won’t settle for second best. NBCU has rolled out a new slogan “All Together. Different.”

While CBS has the most watched network in total viewers, NBCU has an array of assets and a sales structure reporting to Yaccarino designed to slice and dice them according to client needs.

Local TV Plus Radio Equals Advertising Reach

A new analysis done by Nielsen with CBS found that advertising campaigns combining local television and local radio doubled the campaign’s reach in certain markets.

In five markets, Nielsen found that advertisers could reach 84% to 93% of all adults by putting TV and radio together. One effective tactic involved mixing dayparts. For example buying primetime on TV and morning drive on radio reached 75% of adults 18 to 49 in Boston within four weeks.

“Industry-standard measurement is a first step toward showing large advertisers what local advertisers already know -- there is a lot of value to combining local television and radio in a media buy,” said David Poltrack, chief research officer, CBS Corporation, which owns TV and radio stations in a number of major markets. “We will continue working with Nielsen to bring to the industry the rich analytics, reporting tools and planning software needed to prove these benefits to advertisers. The long-term plan is to include online as well. This proof of concept demonstrates the power of broadcasting to quickly and frequently reach mass audiences.”