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March 04, 2011
Troubled by the economy and stiff competition from the telcos and satellite TV providers, Comcast continues to place a great emphasis on growing its programming business. Not accounting for the recent approval to merge with NBC Universal, Comcast has increased its presence in the cable network space dramatically in 2010.
Last year, the company managed to pull off 12 per cent growth in revenues for its programming segment, up from $1.5bn in 2009 to $1.7bn in 2010. Led by E! Entertainment Network, Comcast's stable of cable networks pulled in a 28 per cent EBITDA margin in 2010, up from 20 per cent ten years earlier.
The company has not invested heavily in expanding its international operations only licensing feeds of E! and Style Network abroad. IHS Screen Digest's US Cable Networks Intelligence estimates that five per cent of revenue came from sources outside the US, which leaves plenty of space for expansion into Europe and Asia.
Domestically, E! has been the its most successful cable network, bringing in nearly one-third of all programming segment revenues in 2010. The company's smaller non-sports networks accounted for nearly 30 per cent and its two sports networks Golf Channel and Versus accounted for the remainder.
Comcast's formula of expansion and diversification has paid dividends in recent years. Its programming segment, which in 2000 was barely EBITDA-positive, has grown that figure to nearly $500m in 2010 with an EBITDA margin of 28 per cent.
On the international front, only E! and Style have any significant presence, and only in Europe. The future combination with NBC Universal will give Comcast a new lever when negotiating carriage abroad for G4 and its sports networks.
The addition of NBC Universal's cable networks will provide a significant lever to secure wider carriage internationally, and to increase domestic revenues significantly. Notwithstanding the FCC-mandated conditions to approve the merger with NBCU, IHS Screen Digest believes that C-NBCU has plenty of room to negotiate higher carriage fee domestically due to the fact that current carriage fees for domestic networks are lower than comparable networks.
In 2010, IHS Screen Digest estimates that Time Warner's TNT and TBS brought in $0.86 and $0.82 per sub per month in carriage fees, compared to $0.81 for USA and $0.23 for E!.
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