Research Shows Broadcast Networks Still Highly Desired by Consumers

Despite declines in viewing, broadcast networks top the list for most desired channel groups, according to research from The Diffusion Group.

Diffusion’s national study, Video Viewing Behavior in the Age of Quantum Video, examines preferred network groups by demographics and video behavior. The firm surveyed 2,030 connected consumers as to the five network families they’d prefer to have included in a five-group skinny TV plan. (Respondents were able to see which channels were included in each network group before selecting.) The big four broadcast network groups occupied four of the top five spots, led by NBC Universal (selected by 48%), followed by Fox (41%), Disney/ABC (41%) and CBS (38%).

“Live big-four broadcast viewing is diminishing, as with virtually every major network. This should not imply, however, that their death as brands or as major forces in consumer video is inevitable,” said Michael Greeson, Diffusion’s director of research, in a statement. “The value of their content is immense — top of mind for many viewers.”

The rankings offer important insight into the viability of direct-to-consumer services, according to Diffusion. For example, the fact that the ESPN family failed to rank in the top 10 suggests Disney’s decision to make ESPN Plus a premium add-on to its linear ESPN channel may have been a wise move, the research group noted.

“Many expected ESPN Plus to be the online equivalent of ESPN, but Disney decided that the risk of cannibalizing high-value linear pay-TV subscriptions would create substantial channel conflict and hasten the declines in pay-TV subscriptions,” Greeson stated. “This risk is inherent in the DTC model and must be addressed group by group, even channel by channel.”

For example, though ESPN Plus may be best positioned as a value-add to its live linear pay-TV service, Disney’s family-focused direct-to-consumer service appears destined to follow in the footsteps of CBS All Access – that is, serve as a full-on replacement to its linear channel, with a growing number of high-value titles reserved for the new service, according to Diffusion.

The standings also offer important insight into the viability of a new virtual MVPD entrant, Philo, which is populated by the channels A&E, AMC, Discovery and Viacom, the research firm noted.

“While this may at first glance seem too specialized to gain mass appeal separate from a broadcast bundle, the combination of networks may prove attractive,” according to a Diffusion release. “Keep in mind that A&E was selected as top-five by 37% of connected consumers, AMC by 28%, Viacom by 24% and Scripps by 21%.”

Shout! Factory and ITV in Classic Content Deal

Shout! Factory and ITV Studios Global Entertainment have inked a distribution deal to bring a library of classic films and series, including Sophie’s Choice, On Golden Pond and the 1967 TV series “The Prisoner,” to entertainment platforms in the United States and Canada.

This multi-year deal provides Shout! with broadcast, video on-demand, streaming, digital and home entertainment rights to more than 135 titles. Among the properties in the deal are The Big Sleep (Robert Mitchum, James Stewart, Sarah Miles), Raise the Titanic (Jason Robards), The Boys From Brazil  (Gregory Peck, Laurence Olivier), The Last Unicorn  (Jeff Bridges, Alan Arkin, Mia Farrow), The Eagle Has Landed (Michael Caine, Donald Sutherland, Robert Duvall), Capricorn One (Elliott Gould, James Brolin), The Cassandra Crossing (Sophia Lauren, Richard Harris, Martin Sheen), “Hammer House of Horror,” and Gerry Anderson TV shows (“Fireball XL-5,” “Stingray,” “Thunderbirds,” “Captain Scarlet” and “Supercar”).

“We’re incredibly excited to bring these memorable films and TV shows out through Shout’s distribution channels,” said Shout! Factory’s founders Richard Foos, Bob Emmer and Garson Foos in a joint statement. “There’s a lot of opportunity to distribute this content through digital and cable channels, transactional outlets, and on disc. We love getting into all the nooks and crannies.”

“Our extensive portfolio is rich in classic titles and we are delighted that this deal with Shout! will open up some of our most timeless shows and films to brand new audiences,” said Rob Kaplan, VP, U.S. sales, at ITV Studios Global Entertainment, in a statement.

The two companies are working closely to remaster a number of titles, some of which have never been available on digital, Blu-ray and DVD, according to the Shout! press release. Shout! is also developing bonus content for special editions.

Report: TV Production Mergers on the Rise

With ownership of TV programming rights a vital asset in the burgeoning demand for episodic programing across broadcast, pay-TV and subscription streaming, production company mergers have grown nearly 20% compound annual growth rate in the past five years – from 42 deals in 2013 to 102 deals in 2017, according to new data from IHS Markit.

Citing ongoing advertising pressure and audiences migrating to on-demand platforms, IHS says broadcasters are exploring new revenue sources from content production and distribution. With increased competition between traditional linear channels and online players, creating TV content is a stronger option than licensing from third parties.

The United Kingdom ranked the most active market in terms of number of mergers and acquisitions. However, in terms of deal value, the United States and China led.

“Both large and small companies are trying to find ways to internationalize, which is why Chinese companies have been gobbling up production studios in the United States, and the major Hollywood studios have been building local production networks in key foreign markets,” Tim Westcott, director of research and analysis for programing, said in a statement.

Increased investment in content by Netflix, Amazon and other content buyers has spearheaded M&A activity among content creators. Indeed, deals for scripted producers have grown nearly 30% — from 15 deals in 2013 to 54 in 2017. In comparison, acquisitions of unscripted producers have grown 8%, due to the shift of M&A activity to scripted producers.

The top mergers and acquisitions were led by ITV Studios and Fremantle Media, both of which have invested in a large number of start-up content-production companies. Of the 77 start-up companies launched between 2013 and 2017, 32 were drama specialists. Nearly half of these 32 drama specialists were launched in 2017, reflecting a significant surge in scripted drama investment.

Liberty Global invested in global producers All3Media, ITV and Lionsgate, while Vivendi took an interest in Banijay Group and 21st Century Fox acquired a 50% stake in Endemol Shine.

“These deals … highlight the strategic importance of owning content producers, for all those wanting to attract and retain viewers, subscribers and the revenue they deliver,” said senior research analyst Aled Evans. “The global producer networks offer these start-ups co-production finance mechanisms, worldwide contacts and funding. In return, the investor company gains rights for programming to sell internationally.”