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TV Network Valuations Will Not Be Destroyed by Free Content Distribution
Published: June 1, 2009 at 02:19 PM GMT
Last Updated: May 29, 2009 at 02:19 PM GMT
Jack Myers consults with media companies, marketers and agencies on revenue generation and economic models.
With AOL and Time Warner unbundling their misguided merger/acquisition, Disney's (DIS) decision to join News Corp (NWS) and NBC as an investor in Hulu, and with several senior media company executives sounding off recently about the need to move content behind subscription and micro-payment firewalls, investors are beginning to pay attention to the value of professional video content. Laura Martin, Entertainment, Cable and Internet Analyst for Media Metrics/Soleil Securities expresses concern "about the slippery slope of professional content (CBS, Disney/ABC, NBC, Fox, Viacom, etc) moving from the TV to the PC." Martin calculates that "up to $300B of market cap across the entire television value chain is at risk."
Most cable networks, restricted by their affiliate agreements with cable, satellite and telco/wireless distributors, have thus far resisted the move to online content distribution but are actively exploring online distribution options. Jeff Bewkes, CEO of Time Warner (TWX), has been gaining traction for his "TV Everywhere" model that enables those who pay for content through one platform to receive it on multiple platforms. The economics of this model are troubled at best. Micro-payments offer a more feasible model but are unlikely to become an industry standard. There is growing concern that the fundamental economics of video content distribution will be destroyed in the next several years, resulting in value destruction of the broadcast and cable TV content companies. How will video content distribution models evolve in the next several months and years, and should investors and advertisers be concerned?
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