What Will Drive The Growth For Viacom’s MTV Network?
March 9, 2015 - Finding Carter
Viacom’s MTV network has been struggling with ratings for utterly some time now. In 2014, a network saw a 5% drop in normal primetime viewership in 18-49 demographic. However, MTV is not alone to declare such declines. Most of a media networks struggled in ratings in 2013 as good as in 2014. This can be attributed to a arise of choice video platforms and streaming services, that are now not accounted in Nielsen ratings. Viacom’s government has been outspoken about Nielsen’s rating resource and said that it is “outdated”. Meanwhile, reduce ratings continue to import on a promotion for media networks such as MTV, that saw a 3% decrease in promotion revenues in 2014.
MTV in a new past has been focused on bringing in some-more programming and perplexing to dilate a assembly bottom with shows such as Eye Candy and Finding Carter. We trust that a new programming, joined with a improved announcement marketplace, will expostulate a network’s promotion revenues aloft in a entrance years and subscription revenues will also see a solid growth. However, most of a expansion will be dependant on chartering revenues from choice video platforms.
MTV’s Subscription And Advertising Revenues Likely To Grow In The Coming Years
We guess that MTV U.S. contributes tighten to 10% to Viacom’s value. However, a grant will be most aloft if we comment for a general operations. The network has high invasion of over 90% of a U.S. pay-TV households marketplace and it charges an estimated $0.41 monthly subscriber fees from a pay-TV operators, translating into subscription revenues of $475 million in 2014. Subscription fees have been flourishing usually over a past few years. It has increasing from a small over $0.30 in 2007 to an estimated $0.42 currently. Looking during a network’s promotion revenues, they have declined over a past few years amid reduce viewership and ratings. The promotion revenues were $504 million in 2014 as compared to $678 million in 2008. We design a subscription income expansion to continue in a entrance years and monthly subscription cost to be around $0.50 by a finish of a foresee period. This will interpret into subscription revenues of around $550 million. The expansion in subscription pricing will essentially be led by a annual cost increases. Historical dollar increases in fees per subscriber are clever predictors of destiny growth. Contracts between calm companies and pay-TV use providers embody prescribed yearly increments for cost per subscriber. These contracts are long-term, travelling opposite several years. Also, MTV still has a clever interest to many viewers generally in a desired 18-34 demographic. Even yet a network has seen ratings decrease in a new past, it was some-more or reduction with all a wire networks opposite several media houses.
We also design a promotion revenues to grow tolerably in a entrance years. Ad pricing has picked adult given a recessionary duration of 2008 and 2009. The altogether U.S. promotion marketplace is flourishing and advertisers are peaceful to spend some-more on advertisements. Television still stays a biggest middle for advertisements and so media networks such as MTV should advantage from this extended turn improvement. Moreover, MTV has a younger assembly with median age of 21 years and around 87% of MTV viewers are in 18-49 demographic. This is expected to interest some-more to a advertisers. Also, a network is perplexing to urge a calm by brining new programming and it has also been successful with some of a new shows such as Finding Carter, that saw a 0.5 rating in a 18-49 demographic with 1.14 million sum viewers during a initial season. Accordingly, we trust promotion revenues will grow to $625 million by a finish of a foresee period. This will take shred revenues north of $1.15 billion and an estimated EBITDA domain of 42% for Viacom’s media networks will interpret into EBITDA of tighten to $500 million, representing 9% of a association far-reaching EBITDA.
Streaming To Blame For The Decline In Television Ratings
The decrease in media networks ratings can mostly be attributed to a arise of choice video platforms such as Netflix, Amazon Prime and Hulu. With some-more options accessible for streaming, normal radio is saying a decrease in viewership. In Jan 2015, sum live TV ratings fell 13% as compared to a before year period. Viacom’s altogether media networks ratings were down by some-more than 20% in Jan this year. There has been a arise in video streaming in a new past. Americans increasing streaming Web video to scarcely 11 hours a month during a third entertain of 2014 as compared to 7 hours a year earlier. The information will be even higher if one accounts for Roku, gaming consoles and smartphones. Nielsen will shortly start to comment for ratings on streaming services as well. This will essentially assistance a media networks negotiate aloft chartering fees for a shows that are renouned on a streaming services. While it is formidable to consider if a expansion in chartering revenues can equivalent a declines in radio revenues, inclusion of a choice video height in Nielsen’s ratings will be a right step in preference of a calm companies.
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