Observations on Television Industry 1/N

1. Video
Networks
Internet
Company
Video
Studios
Video
Studios
Video Services
Wireless
Services
Broadband
Services
Legacy Internet
M&A Rationale
• Consolidation of studios with networks
• Still polygamous, but when shows are vertically
owned, better monetization of hits with ability to go
direct to consumer and pivot quickly
Developing Direct Relationship with Consumer
• Networks developing direct relationship with consumer by
introducing video services: Hulu, Philo (no sports)
• Non-cable broadband/wireless companies are introducing video
services: Go90, DirectTV Now
• Internet companies are subsidizing their video ambitions with
their internet revenue streams, creating exclusive content
Sports
• Decline in popularity of NFL and relative popularity and
economics of direct viewing may force identity change of
networks that carry NFL properties
• Networks need a reason to be valuable as aggregator
• Networks need to brand build and use legacy fees to
lower risk of failure of show development
• Cheap networks have less fee pressure, and turn out
programming to find hits that increase price of
distribution
Future Viewing Habits
• People will continue to watch video:
• To kill time, be mildly educated and be entertained
• Eh shows and hits have a place, but spending a lot of
money on “eh” is a bad strategy
• Households will need programming variety –
particularly those with non teenage children
Ultimately, viewing unlikely to be that different from today -
Shows are acclaimed - Networks are watched
Observations
Television Industry Observations