Growing Competition between Cable TV Operators is Good for Marketers

Marketers have traditionally allocated their ad budgets based on the audience reach and price. For many years, cable operators delivered a growing and often targeted audience at a good price. But the latest data on cable TV viewership may have some marketers raising their eyebrows.

Analysts have noted that there are fewer people watching TV these days. In the past several months, the overall audience drop was 2.7%. Broadcast operators having been taking the biggest audience hits. For cable channels, the drop is in the range of 0.6%.  The bigger news in cable is the wide swings in audience numbers between one channel and another. Recent winners include the History Channel which is attracting more viewers with Pawn Stars. AMC is also enjoying audience growth with The Walking Dead and the return of Mad Men. But a cable station can see numbers plunge when a popular show like Sons of Anarchy (FX) or Jersey Shore (MTV) begins to grow old for audiences.

Analysts have noted ‘wild swings’ in network ratings. According the Michael Nathanson at Nomura Securities, the volatility “basically ratchets up the pressures to find hit programming." Networks have explained drops in ratings as the result of everything from nice weather which is keeping people away from TV to low interest in reruns. But Dave Bank, at RBC Capital Markets, offers a more ominous explanation. "The easiest days of cable audience growth are behind us." Writing for the Wall Street Journal, Sam Schechner reminds readers that “the market for pay-​TV service is near saturation and there has been virtually no growth in the past year or so in the number of people signing up for cable channels.”

As a result, cable TV operators must work harder to differentiate themselves. They may also be forced to give out more make-​goods or accept lower ad rates from marketers as the cable TV viewing market remains in turmoil.

[Source: Schechner, Sam. Ratings Take Slide On Cable. Online​.wsj​.com. 25 Mar. 2012. Web. 3 Apr. 2012] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.