Revenue Dips Are Keeping Viacom’s Flailing Cable Business in Last Place

The all-important financial engine for most U.S. media conglomerates — cable networks— enjoyed a decent second quarter: Revenues were up, and margins continue to be healthy. But dig deeper, and you’ll see that there’s a broad divergence of performance across the sector, with Viacom in particular stuck at the low end.

Overall revenue growth for companies owning cable networks has slowed from just over 6% two years ago to just over 4% in the last two quarters. That’s the net effect of trends affecting the two biggest revenue sources: a significant slowdown in affiliate fee growth, somewhat offset by a recovery over the past year in ad revenue growth.

sources: Company Reporting, jackdaw research Analysis

The culprit behind slowing affiliate-fee growth is obvious: cord-cutting and cord- shaving (by subscribers who don’t cut the cord entirely but pay less for offerings like skinny bundles) have driven a reduction in subscriber numbers for almost all major cable networks. The only reason revenues aren’t down is that the companies have managed to negotiate higher fees per subscriber, or benefited from contractual rate increases during the same period.

But these trends don’t reflect all companies equally. AMC Networks has outperformed the market by miles, growing by 16% in total revenue over the past year. At the other end of the spectrum is Viacom, which has been adrift for several years.

Viacom’s ad revenue growth on an annualized basis has been negative for the last two quarters. Affiliate fee revenue was flat in the last year, down from 6%-7% growth just two years ago. Though ad prices have risen at Viacom, too, lower ratings, combined with strategic reduction of ad loads, have allowed revenue to slip. And the loss of 7 million to 8 million subscribers over the last two years across its biggest networks have more than offset any rate increases.

sources: Company Reporting, jackdaw research Analysis

With its change in leadership, Viacom may finally be able to address some of its challenges. Though a reintegration with CBS is often touted as a first step, that by itself would do little to turn things around. Instead, Viacom should seek to emulate three key strategies of its more successful peers: building well-defined brands to serve well-defined audiences, investing in compelling original content, and consolidating around a smaller number of strong networks while eliminating underperforming channels.

These strategies have served most cable companies well, and it’s high time they were put into practice at Viacom. Until that happens, the industry is going to keep leaving Viacom behind.

Jan Dawson is founder and chief analyst at Jackdaw Research, an advisory firm for the consumer technology market.

Popular on Variety

More Voices

  • Fleabag Succession Emmys

    Could 'Fleabag' and 'Succession' Be Spoilers on Emmy Night? (Column)

    At the onset, this year’s Emmy Awards felt a bit anticlimactic, as the final seasons of “Game of Thrones” and “Veep” appeared to have this year’s drama and comedy categories locked up before campaigning even began. But that’s how upsets happen: Just when we’re pretty confident about how things might go, a couple of wild [...]

  • Climate Mobilization

    Marshall Herskovitz: Why the Climate Crisis Needs Movie Marketing-Style Muscle

     I’ve lived inside the climate-communications conundrum for 20 years, working with scientists, academics and activists to find ways to convince Americans that something they couldn’t see or feel was nevertheless a looming catastrophe worth upending their lives to fight. Now the climate crisis is undeniable, and we are finally seeing the beginnings of concerted action. [...]

  • Renée Zellweger, Adam Driver Gain Oscar

    Telluride: Oscar Buzz Builds For Renée Zellweger, Adam Driver and 'The Two Popes'

    This year’s Telluride Film Festival began on Thursday with the Guest/Patron Brunch on a private estate about a 30-minute drive from the center of town. Eggs, bacon and fruit salad were being served as the sun was shining on Martin Scorsese, Adam Driver, Noah Baumbach, Laura Dern, Eddie Redmayne, Felicity Jones, Ken Burns, Ric Burns, [...]

  • Fernando Meirelles The Two Popes

    Telluride: Audience Laughs and Cries During 'The Two Popes' World Premiere

    Little did the audience at the world premiere of “The Two Popes” know that the papal two-hander is actually very funny. No, it’s not a comedy, but the jokes and ribbing between Pope Benedict XVI (Anthony Hopkins) and the future pope, Cardinal Bergoglio (Jonathan Pryce), played well in the packed Chuck Jones’ Cinema, as did [...]

  • Renee Zwllweger in Judy

    Telluride: Renée Zellweger Will Return to the Oscars With 'Judy'

    The Oscars love actors playing alcoholic, drug-addicted singers. Last year, Rami Malek took home the big prize for his portrayal of Freddie Mercury in “Bohemian Rhapsody,” beating out Bradley Cooper for his work as the fictional Jackson Maine in “A Star Is Born.” Over the years, we’ve seen Jamie Foxx win for “Ray,” Jeff Bridges [...]

More From Our Brands

Access exclusive content