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Kagan Forecasts Basic Cable Programming Costs Will Average $2.69/Sub in 2009

Posted on: Friday, 28 October 2005, 15:01 CDT

According to Kagan Research, cable's vigorous growth hasn't come without a cost. The basic cable networks spent an average $2.29 per subscriber per year in programming costs in 2004. The top ten cable nets -- among those on the air for five years or longer -- spent more than three times that, averaging among them $7.78/sub/year.

According to the new report, by 2009 the most costly network on any tier, ESPN, will very nearly double its production costs per sub, growing costs 13% annually to reach $47.46/sub/year from last year's level of $25.90/sub/year. Programming Costs Top Ten Nets(1) 5-Year 2000 2004 CAGR ----------------------------------------------- ------- ------- ------ ESPN $15.38 $25.90 13.9% FSN 10.41 14.42 8.5 TNT 6.65 9.27 8.7 USA 3.54 5.13 9.7 TBS 4.34 4.94 3.3 Nickelodeon 3.52 3.97 3 MTV 2.59 3.85 10.4 Lifetime 3.17 3.6 3.2 NBA TV 10.78 3.47 -24.7 FX Network 2.46 3.27 7.4 ----------------------------------------------- ------- ------- ------ Average $6.28 $7.78 5.5% (1) Average sub per year for nets on the air five years or more. (C) 2005 Kagan Research, LLC estimates. All rights reserved.

Kagan's annual edition of ECONOMICS OF BASIC CABLE NETWORKS 2006 reports that programming costs per sub have stayed essentially flat over the last five years -- slipping just 0.16% since 2000 -- but forecasts they will rebound, growing 3.08% annually to reach an industry average of $2.69/sub/year by 2009.

In general, high programming costs result in higher ratings and ad revenue for cable programmers. "Many were skeptical when FX started spending big bucks for original shows, when TBS began laying out huge sums for movies in an earlier window, and when HBO and Showtime started investing in new original shows," says Derek Baine, senior analyst at Kagan Research. "There have been a few flops but I would say net-net the investment in programming has been a success story."

In addition to programming costs, ECONOMICS OF BASIC CABLE NETWORKS 2006 tracks subscriber growth, revenue, cash flow and comprehensive financial metrics on the sector as a whole. Now available in an electronic edition, the databook provides exclusive Kagan data files and projections in spreadsheet format and includes comprehensive financial metrics on 139 basic cable networks. More than 300 tables -- including current forecasts, analysis and key financial information -- can be accessed to create custom data scenarios, build company profiles and develop comparatives.

The new electronic edition of ECONOMICS OF BASIC CABLE NETWORKS 2006 also offers networks, investors, MSOs, financial analysts and advertising agencies the most up-to-date information, industry projections and other actionable assessments available today.

For Table of Contents and more information on ECONOMICS OF BASIC CABLE NETWORKS 2006 visit www.kagan.com/EBCN-SL/102805

About Kagan Research, LLC.

Kagan Research consulting and publishing services offer exclusive financial data and analysis, relevant market advisories and expert 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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