You might soon be paying more for cable TV. Broadcasting company Scripps said on Wednesday that it locked down cable and satellite carriage agreements that account for 75% of the company’ subscriber households, and touted a bump in how much it’ll be able to get from cable TV providers.
As a result of the deals, Scripps said it expects $750 million in local media division revenue, up 15% over last year. The company also said it was able to get a 40% increase in net distribution dollars.
Scripps President and CEO Adam Symson said in a release that he was “pleased” that the company secured the agreements without resorting to blackouts that “punish viewers.”
But cable TV customers may not go completely unscathed.
With the cost to carry these channels rising, the companies distributing these channels, from Spectrum to DIRECTV, could eventually pass those higher costs to their customers. You’re already seeing it with a number of TV providers raising prices, with DIRECTV announcing their increase last week, which followed a similar hike by DISH Network.
The DIRECTV price hike comes after Nexstar the largest owner of local TV stations, reached a deal to return its local stations to DIRECTV.
In both cases, the providers blamed increased distribution costs for the rate hikes.
Local TV owners, however, have argued about the value of stations like NBC, ABC, and CBS, saying that they still garner more viewers than cable channels, and should be compensated appropriately.
“Scripps is now capturing full value for its pay TV households, and the robust growth in our net distribution margin dollars and gross revenue is a testament to the durable economics of the linear TV marketplace at a time when most streaming services themselves are unprofitable,” Symson said in a statement.
While a majority of streaming services are indeed struggling to make money and raising their own prices, the numbers still reflect a continued exodus of customers from cable. This year alone, companies like Comcast, DIRECTV, and Spectrum have collectively lost over 2.7 million customers. And those customers aren’t switching to live TV streaming services. Hulu + Live TV and Fubo lost over 500,000 customers around the same time.
That leaves the cable and even live TV streaming services in the difficult position of balancing rising distribution costs with customers leaving for free alternatives.
All in all, cable TV companies are shedding about 15,000 subscribers daily in 2023. If the trend continues, the industry will have lost more than 4 million customers by the end of the year.
Consumers are increasingly looking for opportunities to save money as inflation rates creep higher.
“With less disposable income available among consumers, the demand for flexibility in entertainment choices has surged in response to the evolving preferences in entertainment over the recent years,” TiVo’s Video Trends report found.
Viewers are instead opting for ad-supported video on demand, or AVOD, and free ad-supported streaming TV, or FAST. AVOD and FAST channels include apps like Freevee, Crackle, Pluto TV, Tubi and Roku Channel.
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