Joseph O'Halloran ©RapidTVNews | 20-09-2011
New analysis from leading financial analysis house Fitch Ratings is predicting that traditional media providers will see off competition from emerging media for some time.
Overall in Credit Encyclo-Media, Fitch’s Analysis of the US Media & Entertainment Sector, Fitch has a stable outlook on the media and entertainment sector and this opinion also reflects its beliefs regarding emerging media.
Even though it believes that the traditional TV players will be increasingly challenged by shifting media consumption, driven for a large part by emerging technologies, the analyst believes that traditional TV has an enduring strength. In particular it notes traditional TV’s ability to capture large audiences and target-specific demographics.
By way of contrast, and indeed contrary to the boasts of some of the players themselves, Fitch sees limited audience and return on investment (ROI) measurement tools for emerging media, such limitations which it believes will make it difficult for advertisers and media planners to justify significant shifts in marketing budgets toward these platforms.
Taking a look at the hottest topic regarding replacement TV technologies, Fitch believes that the threats of over-the-top (OTT) technology and cord-cutting will not be material to the big media’s free cash flow generation or credit profiles.
Whilst recognising the emergence of various OTT platforms and the questions that their increased adoption poses for the industry, Fitch believes that the big pay-TV players will be able to withstand modest subscriber losses due to cord-cutting over the next five years at least.
Significantly Fitch believes that the money-saving opportunity of cancelling a cable subscription in favour of obtaining OTT content is actually likely to recede over the coming years as subscription-based services increase in price, and heavy use of broadband data for streaming purposes becomes more expensive. It also pinpointed the recent termination of the Starz/Netflix deal as evidence of how content owners will protect their long-term franchise values.
That said Fitch points to Google Fiber as a potential disruptive influence on the market. However, Fitch does not anticipate such services being rolled-out to a large enough population to prevent a credible threat over the medium term.