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K.C. NEEL
Channel expansion, more programming, increased subscriber penetration and greater advertising revenues helped drive revenues for cable and satellite companies significantly last year, according to an annual study by media merchant bank Veronis Suhler & Associates.
Revenues for the entire sector - that includes 21 MSOs, five DBS providers, 16 basic and premium networks and two pay-per-view companies - rose 11.9% to $56.8 billion and grew at an annual compound growth rate of 12.8% between 1995 and 1999.
Cable providers represented the bulk of the revenue growth, accounting for 74.4% of the total. The DBS providers, bolstered by boffo growth in the number of customers they signed up last year, reported growth of 16.3% last year over 1998 totals, outpacing the networks, which collectively grew 8.3% in 1999.
Revenues for the cable and satellite providers grew 16.3% last year to $33.9 billion. Although cable operators made up the bulk of the total - $27.9 billion - the DBS providers were the fastest growing segment of the provider group with revenues of $5.9 billion, up 55.7% from the 1998 totals.
Veronis Suhler expects DBS growth in subscribers and revenue to outpace their cable counterparts for the next few years. DBS revenues have risen eight-fold since 1995.
Wireless cable providers, by far the smallest provider group, reporting 1999 revenues of $88.9 million, experienced a reduction in customers, which contributed to a 16.3% reduction in revenues from the $106.2 million generated in 1998.
The eight largest publicly reporting MSOs posted the following revenue totals in 1999:
- Time Warner with $5.4 billion
- AT&T Broadband with $4.9 billion
- Cablevision Systems with $3.9 billion
- Comcast with $2.9 billion
- MediaOne Group with $2.7 billion
- Cox Communications with $2.3 billion
- Charter Communications with $1.4 billion
- Adelphia Communications with $1.3 billion
Hughes Electronics, which owns DirecTV, and EchoStar Communications, owner of Dish Network, reported 1999 revenues of $3.8 billion and $1.6 billion, respectively.
The 16 publicly reporting networks posted revenues of $11.7 billion, up 8.3% from the previous year. The 14 basic and pay programmers posted revenue increases of 8.4% to $11.2 billion due to increases in license fees charged to operators and customers. Improved ratings and ad rates also contributed to the rise in revenues last year, according to Veronis Suhler.
Time Warner, the world's largest cable network programmer, posted revenues of $6.1 billion, which accounted for 54.5% of the network segment totals. Viacom generated $3 billion in revenues last year, giving it a 27.2% market share.
Assets at all the 47 publicly reporting companies nearly doubled to $297.2 billion in 1999, up from $152 billion in 1998, mainly due to AT&T, which doubled its assets by buying Tele-Communications Inc. last year.
The networks as a whole surpassed the providers last year when it came to asset growth, increasing 152.8% over 1998 totals. Following the increase in assets, depreciation and amortization notched a 23.6% increase to $10.4 billion vs. $8.4 billion in 1998.
The total adjusted operating income for cable and satellite companies slipped sharply from the previous year, however. This is mainly due to significant one-time charges at AT&T, the sale of assets by Time Warner and losses racked up by DBS providers.
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