SNL Kagan has released the 2008 edition of “Economics of Basic Cable Networks.” This study is a comprehensive network-by-network analysis of the cable programming industry.

 

The year 2007 was a banner year for cable networks, according to SNL Kagan. Industry revenue increased 12.6 percent in 2007 to $38 billion. Ad revenue increased 10.5 percent to $19 billion and license fees jumped 15 percent to $20 billion. SNL Kagan expects 2008 to be another strong year due to license fees, which result from long-term contracts. The license fees provide networks with almost half of their revenue.

 

According to Derek Baine, senior analyst for SNL Kagan, “This year’s weak economy has resulted in extremely volatile ad markets with major advertisers scrambling to allocate budgets where they will get the most bang for the buck. Companies that publicly report ad sales for their cable nets showed positive second-quarter results spanning a wide range from +1 percent to +28 percent. However, we expect to start seeing more negative numbers in the second half of 2008.” SNL Kagan products integrate breaking news, comprehensive data and expert analysis into an electronic database available online. This database is kept updated at all times.

 

SNL Kagan forecasts revenue to be up 10.4 percent for all of 2008. This projection has kept in mind an expected weakening in the second half of the year. The growth in 2008 will be cut to 4.7 percent in 2009, after which it will recover to 11.1 percent in 2010. The forecasts from SNL Kagan are generated from a close tracking of company reported financials and regulatory sources as well as an annual survey of top industry executives. The “Economics of Basic Cable Networks” is available exclusively as a part of the SNL Kagan Information Service.

 

The highlights of the 10-year projections from SNL Kagan are listed: total industry multichannel subscribers are expected to grow 1.3 percent per year; total industry ad revenue is expected to increase at an annual rate of 8.1 percent; total industry revenue is expected to grow 8.9 percent per year; total industry cash flow is expected to grow at a CAGR of 10.8 percent per year; average industry cash flow margin is expected to rise from 36.4 percent in 2008 to 42.5 percent in 2017.