The Exchange

There’s Still Money in Broadcast TV, but Cable Is Gaining

The Exchange

On Sunday the Academy of Television Arts & Sciences will host the 64th Primetime Emmy Awards, celebrating all that is new, cool and successful in the world of TV. Naturally, most of the awards will go to the cable networks, as has been the trend in recent years (in fact, cable claimed four of the five total nominations for Outstanding Drama Series this year, with the only non-cable nomination going to PBS for "Downton Abbey"), but that doesn't mean that the party is over for broadcast TV.

At least not yet.

The traditional Big Four broadcast players — ABC, CBS, Fox and NBC — are still drawing a nationwide audience that numbers in the triple-digit millions and can demand top dollar from advertisers (sometimes), but the cable networks are catching up ... and fast. In fact, cable for the first time this summer surpassed the broadcasters in upfront advertising sales, pulling in $9.8 billion versus broadcast's $9.15 billion. And cable revenues are growing at a faster rate, too, up 5%  this year as compared to 1% for broadcast.

For the TV business, this is a watershed moment.

But, for now, at least, there is still plenty of money to go around for the broadcasters. How much? Here's a quick look at how the Big Four are doing, despite cable's advances.

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CBS

CBS (CBS), the home of "NCIS" and "Big Brother," reported a 1%  increase in revenues for its entertainment unit, which includes the CBS Television Network, in 2011, bringing in a total of $7.46 billion versus $7.39 billion in 2010. In its most recent quarter, however, CBS's broadcast division took a dive, with revenues falling 7% to $1.71 billion, thanks to lower advertising sales and cutbacks in syndication. Don't worry about the company itself, though. Overall, CBS said its net income rose 8% in the most recent quarter.

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Walt Disney Co.

As the owner of ABC, ESPN and other networks, Disney (DIS) said its TV business revenues rose 3% in the most recent quarter, to $5.1 billion, mostly driven by large gains in ESPN ad sales. When broken down, however, the gap between the company's broadcast and cable operations is clear. Disney's cable channels brought in $3.6 billion in the latest quarter, while its broadcast activities only accounted for $1.5 billion. And over the past nine months, revenues from Disney's broadcast operations have declined by 1%, while its cable arm is up seven%.

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Comcast

The former "Seinfeld" network is not in a good place right now, as evidenced by recent comments by Steve Burke, CEO of Comcast (CMCSA) subsidiary NBCUniversal, in which he said the storied broadcaster is leaving $1 billion "on the table" when compared to its rivals. "There are four companies that each have the same infrastructure and yet one company is making on average $1 billion a year less than the other three," he said. "Each of our competitors makes somewhere between $700 million and maybe $1.5 billion more than we do, and there's no reason for that, other than we need to make better shows and we need to schedule them better."

The numbers back up Burke's statements. Revenues at Comcast's NBCUniversal unit decreased 0.8% to $5.5 billion in the second quarter of 2012, while operating cash flow fell 15.4% to $982 million on decreased revenue and higher programming costs. In the quarter, revenue at Comcast's cable networks is up 3.6% to $2.1 billion, while the company's broadcast operations are down 9.1%  to $1.6 billion. Over the past six months, however, NBCUniversal's revenues are up 7.8 percent to $11 billion, thanks in no small part to ad income related to the Super Bowl.

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News Corp.

New Corp's (NWS) Fox network is clearly being subsidized by the company's vastly more profitable cable (up 19% in the past year) and film (up 22% in the past year) divisions, but the Fox broadcasting segment is still holding its own. Fox reported $4.7 billion in revenues in the last year and $1.0 billion in the most recent quarter, though operating income has fallen by $20 since 2011. Fox blamed the income losses on lower ratings (and therefore lower advertising revenues) for "American Idol" and the fact that it did not broadcast the most recent Super Bowl.

What do you think? Do you still watch broadcast TV?

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