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The content cash-in

Thursday, November 06, 2014 - 02:13

The latest wave of media earnings show a sector moving past ad dependency, and using their content to generate profits from streaming services and cable operators. Bobbi Rebell reports.

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TV ratings are hurting, but a lot of media companies have reported profits that are quite healthy. Streaming companies like Netflix are paying them directly for their content, and the content providers collect sometimes lucrative fees from cable operators. S & P Capital IQ's Tuna Amobi: SOUNDBITE: TUNA AMOBI, SENIOR EQUITY ANALYST, ENTERTAINMENT AND MEDIA, S&P CAPITAL IQ (ENGLISH) SAYING: "What we are seeing is a kind of a shift from traditional, you know, sources of revenues, to what I might call emerging sources, and that includes some newer platforms - whether it's online or mobile, you know v (video) on demand, social media. So, this is really what we expect to be a secular shift, and the result is that a lot of media companies are trying to basically follow the audience, and try to shift their revenue base towards these kind of incremental emergent sources of revenues, away from the more cyclical advertising." Case in point - CBS, owner of the most-watched U.S. television network, for the first time reported that less than half of its revenue came from advertising, down from more than 70 percent a few years ago. It's been licensing content to Netflix and other streaming services, and has been aggressive in getting higher new retransmission fees from pay TV operators. Those fees were the majority of CBS's overall revenue this past quarter. Also less dependent: Rupert Murdoch's Fox - it got only about a quarter of its revenue from advertising. Ad revenue as a share of the total pie is also falling at Time Warner and Turner networks. But this transition is very much a work in progress. Advertising and ratings still matter. SOUNDBITE: TUNA AMOBI, SENIOR EQUITY ANALYST, ENTERTAINMENT AND MEDIA, S&P CAPITAL IQ (ENGLISH) SAYING: "What it does is to provide even more avenues to content providers to monetize their content, and this is exactly the outcome that they want. The challenge though is to be able to do that without cannibalizing the traditional model which is still the multibillion dollar business. And this is the question that most of the stakeholders are still graplling with" All this also comes at a price - content may rule the media landscape but production costs are upping the ante for all the players.

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The content cash-in

Thursday, November 06, 2014 - 02:13