European pay-TV leaders to rake in more than $4BN by end of 2012

Joseph O'Halloran | 27-11-2012

A new report by Digital TV Research is predicting that total revenues for Europe’s top pay-TV channels will reach $4.24 billion in 2012.

Moreover, presenting a rosy picture for the pay-TV industry, the TV Channel Revenues in Europe report expects this figure to grow by $1.04 billion to reach $5.28 billion by 2017.

Of the 195 international channels/networks from the 11 groups covered in the study — excluding premium channels such as movies and sport that require extra payment by the public — Viacom is cited as market leader by revenues generated, with $741 million anticipated for 2012 and helped greatly by its hugely successful MTV division, and is set to remain so until 2017, raking in just under $1 billion.

Some way behind Viacom are the Eurosport, Discovery and Disney networks with projected 2012 respective revenues of $575 million, $570 million and $549 million.

Looking forward, Discovery has entered into exclusive negotiations with Eurosport’s owner the TF1 Group in order to forge a strategic alliance intended to create value for both companies across their numerous complementary business activities. The move is intended to boost activities in three areas, namely: driving the growth of Eurosport; enhancing both companies’ pay-TV offerings; and developing a mutually beneficial content production relationship.

As regards the source of such revenues, carriage fee revenue provides the majority of income, growing 11.6% from $2.93 billion in 2012 to $3.26 billion in 2017. However, the analyst notes that growth is slowing as markets mature. Explained co-author Nicholas Moncrieff: “Most of the growth will come from a combination of higher penetration in Eastern Europe and the appearance of more HD channels that command higher carriage fees or at least allow channels to protect carriage fees in negotiations with platform operators.”

Advertising revenues are set to increase by 53.1% from $1.32 billion in 2012 to $2.02 billion by 2017. Fellow report co-author Simon Murray added that advertising has more room for growth as non-traditional channels gain audience share and greater acceptance among ad agencies. He warned, though, that international players will face greater competition as traditional domestic terrestrial players push their thematic channels.