More cable TV price hikes are on the way in 2024 as TV networks and locals look for ways to make up lost ad revenue.
According to a report from GroupM, who looks at ad spending in the United States, ad spending on TV will drop 5.1% in 2024 to $52.3 billion.
This has left networks to push cable TV companies to pay more to make up for the loss in ad revenue in a very soft ad market in 2023. Recently Warner Bros. Discovery’s CEO announced during its earnings call that it did not expect the ad market to recover in 2023. This all comes as advertisers have been cutting back or putting their ads in places other than on traditional TV networks.
We are already seeing locals demand more money in 2023. DIRECTV had a long blackout with Nexstar-owned locals and now Tegna-owned locals have gone dark on DIRECTV. Spectrum and Disney also saw a fight that took FX and ESPN off Spectrum cable TV. Look for these fights to become more common as networks look at cable TV to make up for the losses they will see on ad revenue in 2023.
Ad revenue is already down and a 5% drop on top of that could be damaging for many local owners.
Sinclair’s total revenues decreased 27% to $1,541 million versus $2,125 million during the same period the prior year. Media revenues for Sinclair dropped 27% to $1,527 million versus $2,106 million in the prior year.
A significant portion of these losses come from Bally Sports and its parent company, the Diamond Sports Group. If you remove the Bally Sports losses, Sinclair’s total revenues decreased just 8% from $1,669 million in the prior year period and media revenues decreased just 7% from $1,650 million in the prior year period.
Tenga’s revenues dropped almost 7% year-over-year due to a tough ad market and the end of the political ad season, according to their report. Tenga’s total revenue hit $731 million.
Scripps saw revenue down just 1% year-over-year, with a revenue of $352 million.
Weak ad markets also impact cable TV companies as they sell ads against programming on some channels.
Because of all of this look for the cost of cable TV to continue to grow to help offset these losses from a very soft ad market. For cable TV companies, they are stuck between two bad options. First, losing networks and having people cancel because they can’t watch their shows or raising their prices to keep networks drive more people to cancel cable TV.