The profit made by U.S. TV networks might shrink by 41% to $22 billion by 2025, according to analyst Todd Juenger of Sanford Bernstein.
Juenger said his fairly dire assessment is based on a set of relatively benign assumptions.
He posited pay-TV subscribers falling to 82 million over the next seven years from about 97 million now. That includes virtual MVPDs growing to 18 million subs from 5 million now.
He also assumed affiliate fees per sub will increase at a 5.7% compounded annual growth rate, while chalking up a 1.5% annual decline in advertising revenue. Programming costs are expected to rise 6.4% while other expenses increase 1.2%.
“Many investors will disagree with the various line items, but we think it’s fair to say that none of these assumptions are aggressively punitive,” Juenger wrote. “And, very importantly, we are not including the impact of a recession, which hurts advertising by definition and, we think, will be a cliff event for cord-cutting (surely there will be a recession between now and 2025).