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Kagan Projects Sustained Growth for Cable Network Industry in 10-Year Forecast

Posted on: Thursday, 4 August 2005, 15:00 CDT

With Discovery Holdings debuting in the public markets in late July, Cablevision Systems Corp. working on a plan to bring Rainbow Media public, and Viacom splitting into two, investors are finally getting a number of choices in this high-growth sector.

Buoyed by rapid subscriber growth at DIRECTV and DISH Network and high demand for digital tiers from cable customers, the industry posted an estimated $9.0 bil. in cash flow in 2004, with an enviable margin of 34.1%.

The industry continues to be dominated by a handful of cable networks controlled by major media companies such as Disney, Time Warner, News Corp., Viacom and NBC Universal, each of which has a network producing revenue in the $1-$3 bil. range. Total Net Revenue By Cable Network (By Total Revenue 2004) 2000 2001 2002 2003 2004 -------- -------- -------- -------- -------- ESPN $2,013.3 $2,116.0 $2,449.1 $2,871.6 $3,342.1 TNT 1,080.1 1,163.6 1,320.8 1,502.1 1,644.3 FSN 866.3 943.0 1,022.4 1,189.5 1,422.6 Nickelodeon 1,075.0 1,009.7 1,088.0 1,254.1 1,415.3 MTV 738.4 780.0 860.2 998.3 1,091.2 USA 804.2 833.3 883.2 933.1 999.0 CNN 793.0 856.9 813.8 886.3 839.2 TBS 806.0 753.2 763.2 776.2 817.7 Disney Channel 587.2 685.9 735.6 762.7 789.5 Lifetime 660.8 714.9 744.8 733.8 747.4 Discovery 556.8 534.6 532.2 540.8 600.6 Fox News 175.2 207.9 281.4 415.6 506.6 A&E 524.9 509.7 484.9 479.8 495.7 FX Network 250.1 325.2 396.5 441.3 489.3 Comedy Central 282.0 295.9 325.4 372.8 466.9 CNBC 544.0 591.0 463.7 479.0 436.8 History Channel 227.8 252.1 302.7 351.3 426.3 TLC 354.5 366.9 412.0 452.5 410.0 SCI FI 274.9 273.9 319.5 355.1 399.7 ESPN2 265.1 286.0 327.0 363.4 396.7

Just published, Kagan's 12th annual edition of ECONOMICS OF BASIC CABLE NETWORKS 2006 reports that despite Wall Street's pessimism, the cable industry will continue to attract attention from investors. According to Senior Vice President Derek Baine, "Our ten-year forecasting model shows top-line revenue growing at a CAGR of 10.5% per year and cash flow growing 13.3% per year, bringing total industry revenue and cash flow to a respective $73.3 bil. and $32.0 bil. by 2014."

Other industry statistics from ECONOMICS OF BASIC CABLE NETWORKS 2006 include:

-- The top ten most widely carried networks averaged 88.7 mil.

subs in 2004, compared to 88.0 mil. in 2003, growing 0.8% YoY,

with a 3.3% CAGR from 1995-2004.

-- Nickelodeon ratings are up for the second straight year in a

row, going from a 1.50 rating in 2003 to a 1.72 rating in

2004. TNT continues to post strong numbers as well, growing at

a five-year CAGR of 8.4%.

-- License fee revenues rose every year in the past decade. From

1995 through 2004 ESPN grew its average license fee/sub/mo. at

a CAGR of 14.7% -- 5.1x the industry average during the same

period.

ECONOMICS OF BASIC CABLE NETWORKS 2006 tracks the sector as a whole and profiles each network -- including data on revenue, cash flow, programming expenses, TVHH growth, and year-by-year, network-by-network benchmarks vs. industry averages. The databook also presents overview tables and macro-data analysis on new and proposed network launches, mergers and acquisitions, advertising, license fees and other financial metrics in 323 tables and 137 charts.

For Table of Contents and more information on ECONOMICS OF BASIC CABLE NETWORKS 2006 visit www.kagan.com.

About Kagan Research, LLC.

Kagan Research consulting and publishing services offer exclusive financial data and analysis, relevant market advisories and accurate 5- to 10-year projections on cable and DBS, broadcast television and radio, movies, entertainment and sports, digital, wireless and Internet technologies and media finance and law.

Source: Business Wire

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