With Netflix and Disney Plus just months away from launching ad-supported versions of their respective streaming services, Kagan, the media-research arm of S&P Global Market Intelligence, says that lower prices and more ads may just encourage current ad-free customers to switch to the more economical tiers. 

Kagan surveyed about 2,519 streaming service subscribers and found that 60% to 70% of customers of Hulu, Peacock Premium, Discovery Plus and Paramount Plus already subscribed to the ad-free tier. Only about 43% of HBO Max customers subscribe to the ad-supported tier, but that may be because it is only a few months old. HBO Max launched its ad-supported tier in June 2021.

According to Kagan, while about one-third of those ad-supported customers lived in households with less than $50,000 in annual income, 25% to 40% lived in homes where annual incomes were $100,000 or more. 

“Given the popularity of ad-supported plans, operators such as Disney and Netflix that are launching ad-supported plans may not see a mass influx of new subscribers and could instead see a sizable number of existing subs switch to ad-supported offerings,” Kagan senior research analyst Seth Shafer wrote in the report. 

Disney Plus is expected to launch its ad-supported version on December 8,  and Netflix has said it plans to do the same before the end of the year.  Netflix had its first ever quarterly streaming subscriber loss in Q1 (200,000 customers) and in Q2 lost about 1 million streaming customers. The belief is that as the number of streaming services grows, consumers are gravitating toward ad-supported tiers to keep tier monthly costs down. But in the Kagan report,  Shafer wrote that it may just come down to each service being different.

“A case could be made that Netflix and Disney Plus are simply ‘different’ when it comes to ad viewing preferences — Netflix, due to the fact that it has been an ad-free haven for its entire existence and Disney Plus, due to some parents seeking to keep children from being exposed to ads on the service,” Shafer wrote. “While those factors could slightly reduce levels of ad-supported subscribers for Netflix and Disney Plus relative to other services, survey data suggests that a sizable number of new and existing subs for both Netflix and Disney+ will opt for ad-supported tiers.” 

Kagan found that a large percentage of ad-supported users at other streaming services are also subscribers to Netflix and Disney Plus. According to the company, 82% of Hulu, 84% of HBO Max, 79% of Discovery Plus, 78% of Paramount Plus and 66% of Peacock Premium ad-supported subscribers also subscribe to Netflix. Between 42% and 64% of customers of those ad-supported services also subscribe to Disney Plus, according to Kagan.

The researcher added there was little “crossover behavior” between ad-supported and ad-free tiers, meaning that when given the choice, ad-supported customers tend to stick with that tier with other services. 

“Using Hulu and HBO Max as examples due to their larger respondent base sizes across multiple services, ad-supported viewers at those two services tended to select ad-supported tiers when they used other services,” Shafer wrote. “Ad-free viewers were also generally more likely to select ad-free tiers at other services but the tendency was less apparent when compared to ad-supported users opting for other ad-supported offerings.” ■ 

Sales of global smart TVs, weakened as the supply of LCD panels has been hit hard by pandemic-related supply issues, should rise by nearly 2% this year, according to Kagan, a media research unit of S&P Global Market Intelligence.

The return of LCD supplies, coupled with increases in residential broadband penetration which Kagan claims has opened the addressable smart TV market, should add to growth.

In a research note, Kagan said global smart TV shipments should rise 1.9% by the end of this year to 153 million units. The researcher forecasts that compound annual growth rates (CAGR) for smart TVs should increase to 2.3% from 2021 to 2026.

Also: Inflation Pushes 2022 Streaming Device Shipments Down, Kagan Says

“Despite a weak first quarter for global smart TV shipments, declining panel prices and the coming World Cup in November 2022 are expected to overcome the negative effects of inflation to spark consumer demand by the end of 2022,” Kagan said in its report, adding that while supply issues remain for some LCD panel components, the overall supply for TV displays is improving.

Global streaming media device shipments are expected to fall 1.2% in 2022 to 80 million units, due to inflationary pressures, but a recovery is expected in 2023, according to Kagan, a media research unit of S&P Global Market Intelligence.

Shipments of streaming media devices (SMDs) surged in the early days of the pandemic, which in turn affected volumes that would have otherwise emerged in late 2021 and 2022, Kagan said.

Supply-chain issues, including chip shortages and complications in logistics, have
made it difficult for vendors to overhaul their product lines or reduce prices, Kagan said, which has stunted expansion campaigns in emerging markets. 

"The primary challenge to a steeper growth curve for SMDs is the persistent evolution in smart TV interfaces and processing power," S&P Global Market Intelligence research analyst Neil Barbour said in a press release. "As smart TVs become more capable streamers, there is less demand for external hardware solutions. SMD vendors appear to recognize the threat and have actively sought partnerships to deploy their operating systems on smart TVs."

Kagan expects the market to return to growth in 2023, as market forces swing back in favor of low-margin hardware production. The researcher predicts a 4.1% compound annual growth rate (CAGR) for SMD shipments from 2021 through 2026, enough to push the market close to 100 million units in 2026.

Kagan expects the SMD installed base to rise to 313.5 million globally by the end of 2026, from 232.6 million in 2021.

Kagan’s estimates do not include smart TVs, smart speakers, game consoles or other devices with ancillary video streaming functions. ▪️

Growth in residential broadband subscriptions will mainly be a market share game between cable, telco and satellite providers for the foreseeable future, as total high-speed internet penetration passes 90% in the U.S., according to Kagan, the media research unit of S&P Global Market Intelligence. 

Kagan estimates that total U.S. broadband subscriptions will reach 122 million at the end of 2022, as cable operators continue to expand their existing footprints through edge-out programs, telcos upgrade their plant with fiber builds, wireless carriers deploy 5G service, and the federal government offers incentives to bring broadband to rural markets through programs like the $42.5 billion Broadband Equity Access and Deployment (BEAD) project.

Cable broadband growth has been on a slower pace compared to the record growth during the pandemic, a combination of high penetration rates, stiffer competition and a slowdown in new housing starts.

Both Comcast and Charter reported broadband subscriber growth in Q1 that was half that of the prior year, and while most analysts expect operators and telcos to grow their high-speed data customer bases, none expect the pace to quicken anytime soon.

Kagan warns that growth will come at the expense of other players. In the research report, Kagan analysts Ian Olgeirson and John Fletcher write that “there simply are not enough subscribers to accommodate the growth ambitions of each segment.” 

As a result, Kagan expects cable, the hands-down dominant player in the broadband segment for the past decade, to begin to show signs of slippage, with market share dipping slightly to 61.9% through 2026. Telcos will see the biggest market share jump -- from 8% to 12.6% by 2026 -- mainly due to their aggressive fiber buildout, although that is somewhat muted by their legacy copper DSL offerings.

Although the next generation of satellite broadband offers some hope, unfavorable cost and speed comparisons should limit growth expectations, according to Kagan, who estimates their share of the market will remain steady at 1% through 2026. ■ 

While live games continue to attract some of television’s largest audiences, profit margins for U.S. sports networks dropped in 2021 and are expected to continue to deflate through 2025, according to Kagan.

Kagan, a media research group within S&P Global Market Intelligence, said that the cash flow margin for sports networks was 25.3% in 2021 and projects it will plunge to 14.7% in 2025, as costs increase and subscribers cut the cord.

For all basic cable networks, Kagan estimates the average profit margin was 39.7% in 2020 and sees it dropping to 31.2% in 2025.

The decline in profit margins comes despite ad revenues rising and sports cable networks charging cable operators some of the highest carriage fees in the industry.

Kagan says net ad revenues for the top 20 sports-related basic cable networks increased by 13.2% in 2021. Ad revenues fell 23.2% in 2020 when sports leagues canceled games because of COVID-19.

The highest programming fee in the industry goes to Disney’s ESPN, which Kagan estimated at $8.15 per subscriber per month. That rate has been going up 45.6% per year for the past 10 years. But Kagan estimates that ESPN's cash flow margin peaked in 2011 at 41.5% and has since declined to an estimated 25.1% in 2021. ESPN is projected to see margins dip into the single digits as soon as 2023.

TNT, now part of Discovery, generated $2.78 per subscriber. Also getting more than $1 per sub are NFL Network, USA Network, TBS, Fox Sports 1 and ESPN2, according to Kagan.

The reasons for the profit margin squeeze are higher rights fees and declining subscriber numbers. 

Right fees have risen faster than inflation, Kagan says. Current contracts for major sports leagues bring in about $15.5 billion per year. Programmers will try to continue to pass rate increases onto cable operators and consumers. Kagan says this could amount to as much as an additional $15 a month per subscriber.

Total subscribers to bundles of live linear networks across traditional and virtual multichannel video programming distributors (MVPDs) dropped by 4.6 million, or 5.1% in 2021.

Kagan notes that the networks are not the only businesses experiencing shrinking profit margins. Multichannel operators have seen declining margins on video offerings in the past decade as more people cut the cord in the face of rising program expenses. ■

Amortized spending on movies and TV shows by Netflix will rise 26% to $13.6 billion in 2021 and will reach $18.92 billion by 2025, according to predictions published Thursday by S&P Global Market Intelligence's Kagan media research division. 

Of that $13.6 billion in amortized spending, $5.21 billion is earmarked for original productions, Kagan said. (Netflix previously told investors it expects to spend $17 billion on content this year on a cash basis.)

The research company predicts that originals will grow from accounting for just 37.8% of Netflix's content spend in 2020 to taking up 46.5% of the budget 2025.

As Netflix becomes more of a global company, meanwhile, the Kagan research also reveals that North America is accounting for a decreasing portion of the company's revenue, declining from 60.8% in 2017 to 44.3% this year. 

Finally, this last Kagan graphic reveals not only the growth of Netflix's content budget over time, but also the increased share of amortized spending relative to its overall content budget. 

Blackouts of cable networks have cost programmers a total of $179.5 million in lost affiliate fees since 2013, according to a report by Kagan, a unit of S&P Global market intelligence, with more than $18 million of that hit occurring in 2020 alone.

According to Kagan, ViacomCBS has lost the most in affiliate fees over the past eight years — about $40.1 million — with most of that occurring between Oct. 1, 2014 and Aug. 23, 2017,  the dates the programmers’ channels were dark to Suddenlink Communications systems. That 1,057-day blackout cost ViacomCBS about $38.6 million in lost affiliate fees, according to Kagan. Verizon Communications’ 1,567-day carriage dispute with Comcast’s then-owned The Weather Channel was longer — it lasted from March 10, 2015  to June 24, 2019 — but cost the programmer less (about $31.5 million) according to Kagan. Byron Allen’s Entertainment Studios purchased the Weather Channel in 2018. 

In contrast, the shortest dispute was a two-day dark period for Univision Communications channels for Charter Communications customers. That dispute, between Feb. 1 and Feb. 3, 2017, cost the Spanish language programmer about $200,000 in lost affiliate fees, according to Kagan. The least costly dispute was the three-day blackout of CBS broadcast stations for Dish Network customers between Nov. 21 and Nov. 27, 2017, that cost the broadcaster about $100,000 in lost affiliate fees. 

According to Kagan, 2016 was the worst year for blackout losses, with networks missing out on about $37.4 million in carriage fees. Networks lost out on about $31.9 million in fees in 2018, according to Kagan. 

While $180 million seems like a big hit for programmers to take, it is minuscule compared to the amount distributors pay out for content. Kagan later estimated that distributors pay out about $40 billion per year to cable networks for programming. Over an eight-year period, that $180 million represents about 0.06% of the $320 billion distributors have shelled out for content. 

Blackouts have become a common occurrence during carriage negotiations over the past few years, as networks usually time the expiration of their deals around major sporting or entertainment events. Distributors, who run the risk of losing subscribers to other providers the longer the disputes last, have in recent years taken a harder-line stance against carriage-fee increases. With the advent of streaming video, programmers have even more outlets for their programming.  

Even as the number of streaming services have grown with programmers creating direct-to-consumer products like Disney Plus, Discovery Plus, Peacock and the like, Kagan said that traditional distribution continues to be important. 

“Cable-network owners risk affiliate revenue loss in hopes of producing a more favorable deal with traditional multichannel operators, which still serve more than half of the video subscription market in the U.S. and still supply billions of dollars in revenues for the cable network industry,” Kagan wrote. “Although traditional multichannel operators continue to lose subscribers over the years, cable networks will not abandon their cable, satellite and telco customers in the near term, as traditional cable is still a profitable business.”

Despite a falloff in overall subscribers in Q1, virtual MVPD services will bounce back and likely become the gateway for TV services for most consumers, fuboTV founder and CEO David Gandler said at an industry conference Thursday, adding that he sees the day when  customers, tired of continued price increases at the growing number of SVOD services, will turn to aggregators like his company for their entertainment and sports content.

Virtual MVPDs lost about 240,000 subscribers in Q1, according to MoffettNathanson, compared to a loss of about 374,000 customers in the prior year, as gains at fuboTV (about 43,000) and YouTube TV weren’t enough to offset losses at other providers. Still, while some pundits said the losses were a sign that the vMVPD space was headed for more declines, MoffettNathanson said the falloff was an indication of the growing seasonality of the business. 

Gandler, speaking at S&P Global Market Intelligence's virtual Kagan Media Summit on Thursday, agreed, adding that consumers that cut the traditional pay TV cord usually take a few months before signing up with a new service.

“Q1 saw several services that didn’t grow, but we saw that in the last Q1,” Gandler said. “What happens is someone cancels cable or satellite in Q1 and they wait until Q3 to sign up, either because they’re  getting a new apartment, or it’s the NFL season. That has been, even for traditional cable, a historical time for signups.”

Gandler said that most consumers want more content, not less, and that in the end, they will likely turn to aggregators like FuboTV for entertainment, news and sports programming.

“I do believe vMVPDs will become the gateways of television when the street starts to push back on the cost associated with these SVOD services,” Gandler said, later estimating that there could be as many as 50 million subscribers in the vMVPD ecosystem in eight-to-10 years, “and SVOD services will look for ways to be part of those bundles.” 

Gandler believes that despite some pretty hefty increases in the monthly charges for some MVPDs over the years, including his own. In the end, the success of any content service hinges on the value it delivers to the customer.  

“We were a $6.99 service per month back in 2015, increased prices 10 times and still managed to improve all of our KPIs,” Gandler said. “I believe that’s because we are able to provide that value proposition.”

He added that in Q1, the average fuboTV viewer watched 129 hours of content per month, more than twice the 50 hours the average Netflix customer watched that service. 

And though fuboTV is sports focused, it offers general entertainment and new channels in its offerings too. That, he said, is key in attracting and retaining subscribers. 

“We say, ‘Come for the sports, stay for the entertainment. Sports drives acquisitions, it does not drive retention,” Gandler said, adding that Q1 was fubo’s eighth straight quarter of churn reduction.

And that is happening even as vMVPDs have raised prices. 

“The average customer, despite the fact that our product is now $65, is spending about 50 cents per hour,” Gandler said. “It packs a lot of punch for 50 cents per hour. Which [leads] me to believe that the proliferation of SVOD is only going to drive more customers to the virtual MVPD.”

Gandler said that most cord cutters are already paying around $60 per month for the SVOD services they subscribe to, like Netflix ($13.99), Amazon Prime Video ($12.99), Disney Plus ($7.99), HBO Max ($14.99), Hulu ($5.99 w/ads; $11.99 w/o ads) and Paramount Plus ($4.99 w/ads, $9.99 w/o ads).

“We know that media companies will eventually have to raise prices,” Gandler said. “Why? Because sports rights continue  to cost more -- we saw that with the NFL deal that was up 100% -- we’ve seen that with more competition with respect to entertainment content with Apple and Amazon and others getting in to acquire series. Everyone is generally going to be paying more. Prices for those SVOD services right now are low because they want to get as many people in the door as possible, but ultimately prices will go up.”    

Netflix has averaged a price increase about every two years, and in October upped the price of its standard package by $1 per month to $13.99.  Disney Plus increased its monthly charges from $6.99 to $7.99 in March, and others are sure to follow. As the rising cost of content continues to put pressure on streaming services, Gandler said that something will eventually have to give. 

“I believe that consumers are going to start reaching SVOD fatigue at some point,” Gandler said. “$65, $70 or $80 is not really a lot of money, given that people are watching seven days a week.”

Traditional U.S. pay-TV subscriptions dropped by nearly 7.2 million in 2020 according to the latest figures from S&P Global Market Intelligence’s Kagan unit.

The Kagan figures further document that it was a tough year for pay-TV companies as viewers shifted to streaming amid the COVID-19 pandemic.

"Americans continue to leave traditional video services in droves," said Tony Lenoir, senior analyst with Kagan.

Kagan also noted that the loss of traditional pay-TV subscribers has been blunted somewhat by virtual multichannel video programming distributors (vMVPDs), but those fell short of offsetting the losses at cable, telco and satellite.

During the fourth quarter, traditional pay TV subscribers losses slowed to 1.5 million, while vMVPDs gained 223,000 subscribers.

Kagan puts the total number of vMVPD subscribers at 12.5 million.

The combined penetration of traditional and virtual subscriptions -- those with live linear channels in their package -- dropped below 67% at year end. The percentage of households with a traditional multichannel subscription dropped to less than 57%, according to Kagan.

It may seem that 2021 is starting out to be a big year for retransmission consent battles, with fights between Cox Media Group, DirecTV and Suddenlink dominating the news around Super Bowl LV, but according to a top researcher, this year may offer a bit of a respite to those weary of the rhetoric that usually surrounds such negotiations. 

According to Kagan, a unit of S&P Global Market Intelligence, about 22 retrans deals are expected to come up for renewal in 2021, affecting about 30.2 million subscribers. All together, Kagan estimates that about 334 stations in 244 markets will come up for renewal this year. 

While comparisons are tough, Kagan says that is lower than 2020, when they estimate retrans deals affected about 56 million subscribers. 

Although there may be fewer pacts up for renewal in 2021, distributors are still expected to pay more for retransmission consent this year. In June Kagan estimated that retransmission consent revenue would rise about 2% in 2021 to $12.4 billion.

Kagan is basing its pending deal numbers on a typical 3-year timeline from the last public retrans transaction announcement or from earnings calls and investor presentations. Typically, broadcasters and distributors don’t reveal when a deal is up until it is, citing non-disclosure agreements embedded in retrans contracts. 

There are some slight exceptions -- Comcast lists on its customer support website pending deals looking ahead a few months, but doesn’t reveal specific dates. For example, the site shows that 11 stations owned by Weigel Broadcasting in eight markets (Cedar City, Iowa; Seattle; Chicago; Glenwood Springs, Colorado; Palo Alto, California; Bellingham, Washington; South Bend, Indiana; and Rockford, Illinois) are up for renewal in February, as are three stations owned by Draper Holdings Business Trust in Salisbury, Maryland, and Georgetown, Delaware. 

Another nine stations owned by Quincy Media -- which agreed to be purchased by Gray TV on Feb. 1 -- in Arizona, Illinois, Indiana and West Virginia are coming up for renewal in March. Also that month, two stations in Shreveport, Louisiana -- KPXJ and KTBS -- owned by the Wray Properties Trust, are set for renewals.

The country’s largest cable operator also said on its customer support site that it will be moving Cartoon Network to its Digital Preferred, Preferred and Preferred + tiers on April 13. On the site, Comcast said the change is part of a regular review of its programming.

“We regularly review our programming and sometimes make changes to ensure we're offering a wide variety of programming at the best value,” Comcast said. “We look at a variety of factors, including customer viewership and programming costs when making these decisions. Given this, we are moving the Cartoon Network to the Digital Preferred, Preferred or Preferred + package, to help manage programming costs that are passed on to our customers while continuing to make the channel available to those who want to watch it.” 

Comcast also has several of its NBC owned-and-operated stations coming up for renewal in March, but that isn’t expected to cause much controversy, as well as a handful of its cable networks -- Bravo, CNBC, MSNBC, E!, Golf Channel, Syfy, Oxygen, Olympic Channel, USA, Universo and Universal Kids. 

Several regional sports networks are up for negotiation, including six NBC-owned RSNs: NBC Sports Bay Area, NBC Sports Boston, NBC Sports California, NBC Sports Washington and NBC Sports Washington Plus. NBC Sports Network, which the company said earlier this month will be shuttered at the end of the year, also is up for renewal. Three AT&T-owned RSNs are set to expire in March: AT&T SportsNet Pittsburgh, AT&T SportsNet Rocky Mountain and Root Sports Northwest. According to Kagan, Comcast also has to negotiate with Meredith for 13 stations this year. It last did a retrans deal with the broadcaster in the first half of fiscal 2019, which spanned June 30 to Dec. 31, 2018. 

For the most part, distributors stay away from revealing when deals are up. But for the average layperson, it isn’t that hard to figure out a ballpark time frame for disputes. They usually occur around major live TV events -- opening days of the regular season for major professional sports, playoffs for major sports leagues, the World Series, The Super Bowl, The Academy Awards, the summer, and major holidays with a big sports connection like Thanksgiving Day and New Year’s Day. 

Also Read: Retrans’ Hobson’s Choice 

Also this year, large broadcast station groups that some have complained are particularly aggressive with smaller distributors, may find themselves in a different negotiating dynamic.

In May, a Federal Communications Commission order giving buying groups like the National Cable Television Cooperative the same good-faith negotiation protections as  individual MVPDs in retrans talks where they represent operators, has given smaller cable companies sharper teeth in talks with larger broadcasters.  That protection took hold in July. 

So far, NCTC is keeping any retrans deals it reached in 2020 close to the vest, but said more are likely to come. 

“In 2020, NCTC was very successful and closed multiple deals and we hope to continue that trend,” said NCTC EVP of programming Judy Meyka in an email message. 

And though it is possible that this year will be lighter on the retrans rhetoric, it doesn’t mean that some big fights couldn’t be brewing.

Dish Network, always ready to get in the ring with a programmer, has two big retrans renewals this year according to Kagan -- with Tegna for about 61 stations in 51 markets and Sinclair Broadcast Group for 113 stations 93  markets. Dish last reached a retrans renewal with Tegna in December 2018, so it is likely that deal will come due toward the end of the year.  According to a research note by Wells Fargo Securities media and broadcast analyst Steven Cahall, the Dish/Sinclair deal is expected to come up for renewal in the summer. That renewal also is expected to include Sinclair’s regional sports networks, which went dark to Dish customers in July 2019. 

After Dish, the next biggest retrans negotiator is Cox, with about 50 stations in 35 markets to hammer out deals with (33 owned by Nexstar Media Group, 13 owned by Sinclair). Cox last reached a retrans deal with Nexstar in Feb. 2016. About 28 Fox stations in 18 markets are up for renewal with AT&T/DirecTV/ U-verse, building on the deals it reached so far this year with Cox Media  Group.

So those that crave a good old-fashioned retrans shoutfest shouldn’t be that disappointed. 

The share of U.S. wireline broadband homes no longer subscribing to a linear pay TV service reached 37% in the second quarter, according to Kagan, a group within S&P Global Market Intelligence.

In the first quarter of 2014, Kagan found that only 12.5% of broadband homes didn’t take a pay TV service. 

Kagan also said that nearly 30% of all occupied U.S. homes don’t subscribe to a multichannel video programming distributor (MVPD) service. The growth of broadband-only homes during the first half of 2020 is about 80% higher than it was during the first six months of 2019. 

“Given the economic headwinds of the first half, U.S. households likely were looking to cut back on discretionary spending, including entertainment,” said Kagan senior research analyst  Tony Lenoir. At a monthly $100-plus average, traditional multichannel services stand out in budgeting decisions, particularly in the era of streaming video proliferation.

Paul Kagan, whose approach to research revolutionized the way analysts, Wall Street and the media industry itself looked at the cable business, died Aug. 23. He was 82 years old.

According to an obituary written by his family, the cause of death was kidney failure. 

Kagan is best known for his Carmel, Calif.-based research company, Paul Kagan Associates, which he founded in 1969 after a one-year stint as a broadcasting industry analyst for E.F. Hutton. Kagan was the first analyst to value cable companies based on multiples of cash flow -- instead of the traditional earnings valuations -- a move that more accurately tracked the then-fledgling industry.

In 2000 Kagan sold Paul Kagan Associates to Primedia. He stayed with the firm he founded for five years, forming PK Worldwide media in 2005, also based in Carmel. Primedia sold Paul Kagan Associates to MCG Capital in 2004, which renamed it Kagan Research LLC. In 2007, MCG sold the company to SNL Financial and in 2015 McGraw-Hill Financial purchased SNL Financial, including the Kagan properties. The research company continues to operate as Kagan, a unit of S&P Global Market Intelligence.   

At its height, Paul Kagan Associates maintained offices in Carmel; Denver; London; and Hong Kong, published 38 newsletters, 95 databooks, conducted a dozen high-level conferences each year and valued billions of dollars worth of companies, provided expert witness testimony and consulted for leading companies and government agencies.   

Friends, colleagues, business leaders and family remembered Kagan as an innovator, a dedicated family man and mentor, who enjoyed a good joke and who lived life to the fullest.  

He was named to The Cable Center Hall of Fame in 2011 and was a co-founder and director of The Cable Center, a co-founder and Director Emeritus of the John Bayliss Broadcast Foundation, which offers grants to students seeking a career in radio, a fellow of the New York Society of Security Analysts and a member of the Media Analysts Group of New York. 

Kagan is survived by his wife of 62 years Florrie, daughters Melanie (Ross) Canter, Linda (Ron) Cosmero and grandchildren Mia Canter, Gabe Canter and Matthew Cosmero. 

The family said in memory of Kagan that it will be donating to the Warriors Community Foundation, which is dedicated to making a meaningful and lasting impact on the lives of underserved youth in the San Francisco Bay Area. 

Broadcast TV and radio station mergers and acquisitions reached a total of $2.64 billion in the first quarter, most of that attributable to the sale of Spanish language broadcaster Univision, according to Kagan, a unit of S&P Global Market Intelligence.

In February, private equity firms SearchLight Capital and ForgeLight agreed to purchase a 64% stake in Univision for an undisclosed sum. Kagan, using its $3.9 billion valuation of the company, estimated a 64% interest to be worth about $2.49 billion.

TV station M&A in the period was about $2.34 billion, according to Kagan. Kagan valued the TV station portion of the Univision deal at about $2.2 billion.

The current deal volume was well below last year, which Kagan estimated at $6.5 billion. 

According to Kagan, Q1 deal volumes weren’t affected by the COVID-19 outbreak, although the company predicted a steep decline in deals in the next few months, adding that the recovery should be equally as robust. Kagan pointed to some deals already in the pipeline -- most notably the offers for broadcast group Tegna, for its 66 stations across the country as an example.

“That could harbinger a first large deal announcement after the COVID-19 pandemic,” Kagan said.

Aside from the Univision buyout, Kagan estimated the first quarter's largest TV transaction was a settlement between Tribune Media and Sinclair Broadcast Group, in which Nexstar Media Group, the new owner of Tribune Media, will receive Sinclair's Fox affiliate WDKY-TV in the Lexington, Ky., market, along with certain assets of CBS affiliate KGBT-TV in Harlingen, Texas, together with a $60 million cash payment.

The first quarter's largest TV deal announcement with a disclosed price was the $15 million sale of Mega-TV affiliate KTBU-TV in the Houston, Texas, market, from Spanish Broadcasting System Inc. to Tegna.

IPTV surpassed direct-to-home distribution as the second largest multichannel platform in the world in 2018 after cable TV, helping to boost overall multichannel subscribers by 3.1% globally, according to Kagan, a unit of S&P Global Market Intelligence.

According to Kagan, IPTV accounted for 23.4% of the total market of 1.07 billion homes globally. In addition, Kagan predicts that IPTV will report a 7% compound annual growth rate over the next five years, second only to pay digital terrestrial television, which will grow at an 8.5% CAGR over the same period.

While cable TV is expected to remain the largest multichannel platform over the next five years, Kagan estimates its subscribers will decline at an 0.3% rate by 2023, largely because of customer migration to IPTV in Asia Pacific and Western Europe.

Kagan added that the global multichannel market grew by 3.1% year-over-year in 2018, with China, India and the U.S. remaining the largest regions. Those three countries collectively accounted for 57% of the global subscriber total in 2018. China and India alone are expected to account for 50% of the global market by 2023, Kagan said.

Global multichannel household growth will continue to slow with most markets across Europe, North America and advanced multichannel markets in Asia reaching saturation, but Kagan also predicted that the number of multichannel subscribers worldwide will rise 2.4% annually over the next five years, reaching 1.21 billion. Other highlights from the Kagan report include:

• The global multichannel economy generated $230.06 billion in video service revenues in 2018, projected to increase to $245.41 by 2023;

• Multichannel penetration crossed 60% in 2018 and should rise to 61.2% over the next five years;

• The effects of cord cutting are only observed in North America where multichannel subscribers, revenue and penetration are projected to decline in the foreseeable future;

• Cord cutting also impacted a handful of oversaturated markets, including Singapore and Hong Kong, which led to subscriber losses and household penetration declines;

• In Europe, the biggest threat to traditional multichannel posed by DTT platforms lies in the integration of OTT and catch-up TV services, as well as the ability to stream channel packages via hybrid boxes.

As consumers continue to cut the pay TV cord, broadband-only households could nearly double to 40.8 million by 2023 from their current level of about 23.3 million homes, according to Kagan, a media research group within S&P Global Market Intelligence.

“The steep upward trend due to ‘cord-cutting’ is not surprising given the abundance of online video services on the market, although this could be a circular argument, with more companies jumping on the streaming video bandwagon in response to the growing broadband-only market,” said senior Kagan research analyst Tony Lenoir, in a statement.

Kagan expects the segment of broadband homes without a traditional multichannel subscription to account for nearly one-third of U.S. households in the next five years. Over-the-top services offered at competitive prices is a major factor in compelling consumers to cut the cord, Kagan found. Other reasons for the strong growth projections of broadband-only growth include the ease of joining and cancelling online streaming services -- they typically do not require contracts.

“The value proposition of streaming video services touches a chord with the average consumer,” Lenoir said in the statement. “The vast majority of streaming services offer free trial periods, effectively allowing consumers to shop around while bypassing hardware hassles associated with legacy video distribution. This coupled with the fact that streaming services are typically screen-agnostic and seamlessly portable, offer individual, customized consumption for customers.”

Broadband-only homes are expected to increase at an 11.9% compound annual growth rate between 2018 and 2023, according to Kagan. The researcher added that about 41.7% of wireline broadband households will be broadband-only by 2023. Kagan expects cable and telco broadband to serve nearly 75% of U.S. households by that time. 

Whatever optimism there was around the prospects for traditional pay TV video subscriber growth was snuffed out in the third quarter, as the sector shed more than 1.2 million customers, according to Kagan, a unit of S&P Global Market Intelligence.

Accelerated satellite TV subscriber losses and sluggish growth from virtual MVPDs like Sling TV and DirecTV Now stamped out any improvements in the cable sector.

Kagan's numbers are higher than MoffettNathanson principal and senior analyst Craig Moffett's estimates -- earlier this month he saw the sector, including vMVPDs, declining by about 709,000 subscribers in Q3. According to Moffett, traditional pay TV companies lost 1.1 million video customers while vMVPDs added 414,000 customers. Kagan did not break out individual sector results, but the message was the same -- cord cutting appears to be accelerating.

According to Kagan, vMVPDs Sling TV, DirecTV Now, Hulu with Live TV, YouTube TV and PlayStation Vue gained an estimated 2.1 million subs in the trailing nine months, compared a decline of 2.8 million in the traditional segment.

Kagan said residential penetration rates were 76.2% when traditional and vMVPDs were considered. Satellite -- led by a loss of 367,000 customers at Dish -- had its worst quarter on record according to Kagan, with a loss of 726,000 subscribers. Cable operators, according to Kagan, lost nearly 1.1 million subscribers year-to-date as of Sept. 30, the sector’s worst 9-month performance since 2014. Traditional telco subscriptions were down by 94,000 in the period, with Verizon losing 63,000 subscribers on its own.

With viewership increasing rapidly on its ad-based platform, and lacking tools to effectively measure it, Roku said it is partnering with 11 research companies to count eyeballs across the entire “marketing funnel.”

Included in the Measurement Partner Program are Nielsen, comScore, ResearchNow, Nielsen Catalina Solutions, Acxiom, Experian, Oracle Data Cloud, Kantar, Placed, Factual, and Polk.

While no individual research company has delivered entirely on what marketers say they want when they advertise on an OTT platform—the kind of granular data you get when you market through, say, Google—each of these entities has expertise in the texture of at least one portion of the proverbial elephant.

Currently, OTT platforms command only around $2 billion of a U.S. television advertising budget worth about $70 billion annually.

Related: Roku: ‘We Now Uniquely Deliver 10% of Adults 18-34’

“As OTT becomes a larger share of their annual ad spend, brands are actively seeking trusted third-party measurement,” said Dan Robbins, director of ad and programming research for Roku. “Roku is committed to providing an open ad platform that ensures marketers have a wide variety of tools and standards to benchmark against.”

Roku reported a 57% spike in revenue in the second quarter to $156.8 million, with the company now getting the lion’s share of its money now from advertising as opposed to device sales.

“I think the big takeaway for us is this is really the first year in which advertisers are proactively planning for OTT as part of their annual TV spending plan,” said Scott Rosenberg, general manager of platform business for Roku, speaking during his company’s August earnings call. "Roku now uniquely delivers 10% of adult 18 to 34. So if you're planning against that critical demo, you’ve got to include OTT in your planning process. (Quote provided by Seeking Alpha.)

As an example of how Roku is working with its research partners, the company pointed to a Jack in the Box campaign that ran on its platform. According to partner Placed, the campaign drove more than 164,000 store visits from December 2017 to February 2018, with 43% of those visits coming from new customers. 

Broadcast station deal volumes reached $657.8 million in Q3, fueled mainly by spinoffs from larger deals, according to S&P Global Market Intelligence media research group Kagan.

According to Kagan, Gray Television’s $3.6 billion purchase of Raycom Media created overlaps in nine markets, and in August Gray sold nine stations to four different buyers for a combined $235.5 million. Three of these transactions represent the quarter's three top TV deals: TEGNA Inc. bought two stations for $105 million, Lockwood Broadcast Group acquired four stations for $67 million and E.W. Scripps paid $55 million for two stations plus one Class-A station.

Kagan added that Raycom bought the licenses of two stations, which it had operated under shared services agreements, from two license owners for $16.77 million. Nexstar Media Group Inc. purchased the license of KRBK in the Springfield, Mo., market from Koplar Communications for $16.45 million. Nexstar was already operating the station under a local marketing agreement.

Related: Tribune Terminates Sinclair Deal 

Kagan added that it has revised its Q2 2018 deal volume estimates to account for the cancelled Sinclair/Tribune merger. Kagan had estimated in July that the spinoffs from that merger alone would amount to about $1.48 billion. The deal was scrapped in August after federal regulators recommended an administrative law judge review the deal. Kagan revised its records for the quarter and and now estimated that Q2 2018 TV deal volume was about $3.55 billion.

Industry researcher Kagan, a unit of S&P Global Market Intelligence, put to paper on Wednesday what practically every pay TV customer has been saying for the past decade and a half – multichannel video service just plain costs too much.

Affordability has been a big issue in the pay TV space for years – former Sanford Bernstein analyst, now MoffettNathanson principal and senior analyst Craig Moffett first sounded the alarm in 2009. But the disparity has become even more pronounced as pay TV bills have continued to rise – averaging about $101 per month, according to Kagan – while over-the-top competitors like Sling TV, DirecTV Now, Hulu and others offer a lighter service at a fraction of the cost.

According to its latest research, Kagan estimated that pricing for multichannel video has risen 74% since 2000, when it was around $58 per month, to 2017, when charges increased to $100.96 per month. On an annual basis, and using 2017 inflation-adjusted dollars, this means legacy pay TV homes in 2000 were spending an average of $698.30 annually on multichannel service, according to Kagan. By 2017, that amount ballooned to $1,211.58.

That increase also coincides with big boosts in service – in the past 17 years the number of channels available to customers has risen exponentially and cable, satellite and telco service providers have introduced enhanced offerings like DVRs, video on demand, more intuitive user interfaces and HD. Be that as it may, Kagan noted that during that same period, average real U.S. income increased 0.3% annually, or a total of 4.7% between 2000 and 2017.

That has had an impact on penetration rates for service, says Kagan, with more affluent areas able to afford more. Using census data, Kagan determined that multichannel penetration was about 71.2% in zip codes where the average mean income was below $49,999 annually – compared to the national average of about 74%. In zip codes where the average mean income was more than $200,000 annually, multichannel penetration was 82.6%.

“The eroding legacy multichannel affordability partly explains the popularity of over-the-top services such as Netflix and Amazon’s Prime Video,” Kagan said in its report. “It also provides a context for the relative enthusiasm surrounding virtual service providers such as Dish Network’s Sling TV and AT&T’s DirecTV Now, whose entry-level packages currently retail at $20 per month and $35 per month, respectively."

Pay TV subscriber rolls fell by 3.7% in 2017 according to industry researcher Kagan, fueled by larger than expected losses at satellite TV providers and accelerated declines at cable operators.

Total pay TV subscribers fell to 94 million in 2017. Including virtual MVPDs like Sling TV and DirecTV Now boosts the total count to 97.3 million, according to Kagan, a unit of S&P Global Intelligence.  Combined Kagan estimated that cable, satellite and telco subscriptions were down by 7.4 million customers from their peak in 2012.

Cable operators lost 986,411 video subscribers in 2017, more than twice their 2016 drop. That, according to  Kagan, broke the sector’s three-year streak of decelerating video subscriber losses.

Telcos slowed their net subscriber losses for a third consecutive quarter. The sector shed 903,262 subscribers overall in 2017 to end the year at 10.6 million.

The satellite TV sector was down nearly 1.7 million subscribers in 2017, its biggest annual loss on record, as DirecTV joined Dish Network in posting traditional subscriber declines.

Cable operator spending on two key network-facing initiatives – distributed access architectures (DAA) and new “virtual” converged cable access platform (vCCAP) implementations – is poised to ramp up over the next five years, according to a new forecast from Kagan, a media research group within S&P Global Market Intelligence.

RELATED: Ramping Up for Remote PHY

Amid MSO plans to move ahead with multi-year transitions to next-gen technologies, Kagan sees spending on remote PHY and remote MACPHY optical nodes – elements that move important electronics and functions of traditionally centralized CCAPs toward the edge of the network – jumping from $60.9 million this year to $544.7 million in 2019 and $969.2 million in 2022.

RELATED: CableLabs Moves Ahead with Remote MACPHY

Kagan is also forecasting that virtual CCAP/CMTS revenue will climb from $20.5 million in 2018 to $536.3 million in 2022, anticipating that operators in North America and Western Europe will lead the way initially in virtualizing a “small percentage of their systems.”

The moves toward DAA and software-driven vCCAPs are entering play as MSOs strive to add capacity to their networks while also reducing the headend/hub space, cooling and powering requirements that come with traditional, centralized, chassis-based CCAP products.

And while the amount of spend that will go toward the access network won’t rise a huge amount even as more of that money goes toward DAA and virtual CCAP deployments (with a good portion of going to market-leading, incumbent CCAP suppliers), those initiatives are likewise expected to open up opportunities for others that are trying to elbow their way in.

“It’s clear that there will be opportunities for those new suppliers,” Jeff Heynen, consulting director at SNL Kagan, said.

Of recent note, Sweden’s ComHem is starting to deploy a centralized virtual CCAP approach in partnership with Harmonic and its “CableOS” platform, and WideOpenWest is pushing ahead on a DAA project with Nokia.

RELATED: Harmonic IDs a Real Deployment for Its Virtual CCAP

Heynen said getting a handle on space constraints will likely be the biggest initial driver for vCCAP deployments, noting that some MSOs are “feeling the pinch” in their headend and hub sites as they continue to need to tack on capacity.

However, he stressed in his study that even MSOs that are early to the game with virtual CCAP deployments will be operating co-existing virtual and non-virtual CCAPs for a number of years.

Television station ad revenue is expected to grow at a 3% compound annual rate over the next five years, according to a new report from Kagan.

Kagan, a part of S&P Global Market Intelligence, says TV stations generated $30.84 billion in revenue in 2016, including advertising and retransmission consent payments. Radio station generated another $17.7 billion in revenue.

TV advertising revenue is expected to decline 6.5% to $21.38 billion in 2017, a non-election, non-Olympic year, with rises in other revenue categories (including 18% in retransmission consent, to $10.23billion) not fully offsetting the loss. But in 2018, ad revenue will increase to $23.43 billion, with the Winter games and mid-term political campaigns. 

Kagan says that while political ads will remain important, the TV station business is expected to become less reliant on the traditional spot marketplace, with a bigger share of revenues coming from retransmission and digital reducing the swings from even and odd numbered years.

Kourou, French Guiana — “We have more internets!”

After years of tension and toil, that was the joyful exultation of a ViaSat engineer the night of June 2, nearly 45 minutes after ViaSat 2, a new high-capacity broadband satellite, was successfully launched into orbit aboard an Ariane 5 heavy-lift rocket from Arianespace’s facilities in French Guiana.

The new bird, built by Boeing Commercial Satellite Systems, is equipped to deliver a powerful payload of 300 Gigabits per second of total throughput.

ViaSat 2 won’t enter service until early 2018 (ViaSat announced on June 22 that the solar arrays of the new satellite were successfully deployed), but the company is already laying the groundwork to deliver satellite broadband services of 100 Megabits per second or more.

For satellite-delivered broadband, that will represent a major accomplishment. A 100 Megabits-per-second offering would essentially quadruple the maximum downstream speeds now delivered by ViaSat’s current top end “Exede” service, as well as what’s offered by one of its chief rivals, Echo-Star-owned Hughes Network Systems.

“We’re still working on our plans, but we likely will have service plans that are up to 100 Mbps, and we may have some that are as high as 200 Mbps,” Mark Dankberg, chairman and CEO of ViaSat, said in an interview just hours before the launch, and during a driving rainstorm that, thanks to the lack of lightning, was never truly a threat to scrub the big event. “The satellite’s capable of that. The real issue is how do we price those plans and how many subscribers can we put on them?”

Though a 100 Mbps satellite-delivered broadband service is achievable, Dankberg said he believes most of the company’s subscribers will be on tiers that deliver slower speeds. But the launch of ViaSat 2 will give the company, which has about 659,000 satellite-broadband subscribers, the ability to far exceed what it’s delivering in the U.S. today using a legacy satellite fleet that includes ViaSat 1 and birds acquired in its 2009 acquisition of WildBlue Communications.

In addition to delivering gobs of bandwidth, ViaSat 2, at an orbital location of 22,236 miles above the earth’s equator (at 69.9 degrees west longitude), will enable ViaSat to expand coverage in North America, Central America, the Caribbean and a portion of northern South America. Key transportation routes between North America and Europe also are expected to benefit.

And there’s a lot more to come. “ViaSat has ambitions to be a global broadband services company,” Dankberg said. “This ViaSat 2 launch is a big step along the way for us towards that path.”

Faster and More Competitive
The ability to deliver faster speeds will give ViaSat a way to compete more directly with cable operators, telcos and other wireline internet service providers. But that won’t be the primary focus.

“Our mission is to be a really good choice for the underserved — not necessarily for people who already have access to fiber-to-the-home or the most modern cable [high-speed internet] service,” Dankberg said. “But the qualification I’m going to make to that is, we want to give that same experience to people who otherwise can’t get it.”

ViaSat 2 will help to turn ViaSat into a bigger regional provider of services that will also span government and enterprise customers while also enhancing its ability to deliver high-quality inflight connectivity as well as broadband service to cruise ships.

It will also amp up competition with Hughes Network Systems, which launched its HughesNet Gen5 service in March, and has already added about 100,000 new and upgrading subscribers to the speedier platform, which matches a 25 Mbps downstream with a 3 Mbps upstream. Gen5 is powered by EchoStar XIX/Jupiter 2, a multi-spot-beam, Ka-band satellite made by Space Systems Loral that launched on Dec. 18, 2016, and complements Hughes’s EchoStar XVII and Spaceway 3 data satellites.

Related: Hughes Tees Up Faster Satellite Broadband Service

Hughes, which has about 1.04 million satellite broadband subs and reaches both U.S. continental coasts plus parts of Alaska, believes it’s playing an important role because terrestrial broadband providers are more limited in how rapidly they can expand and generally don’t put a lot of focus on rural areas, according to Peter Gulla, senior vice president of marketing at Hughes.

Gulla said Hughes is also “finding a lot of opportunity” in areas where the telcos are letting their DSL networks languish as many instead focus on new fixed wireless options.

Still, Hughes will keep its target focused mostly on rural areas and where DSL service is weak, rather than applying marketing dollars and other resources in areas where wireline broadband competition is already strong.

“We are starting to see opportunities in the slow DSL areas,” Gulla said. “But you won’t be seeing us dropping a lot of flyers in New York City trying to convince people that they ought to switch to satellite [broadband]. I think we’re being realistic about what our product is and what it’s good for and what it does and what the value is.”

Though ViaSat is getting ready to raise the speed bar for satellite-delivered broadband, Hughes is not yet making any formal commitments to upgrade its capabilities.

“Right now, 25 [Mbps] seems to be meeting the needs of our customers,” Gulla said. “But that doesn’t mean that’s the end of the line.”

Need for Pricing, Data Flexibility
Beyond speed, other issues remain hot-button competitive factors. Among them: Satellite broadband-service providers will need to be more flexible on pricing and support relaxed data policies if they are to have much success in their traditional markets, even as some of them look to extend beyond rural regions, Jeff Heynen, consulting director and analyst at Kagan, said. Strict and complicated usage caps and data plans have long been sticking points for the satellite services.

Related: FCC OKs OneWeb Satellite Broadband Service

Under policies for ViaSat’s current Exede service, for instance, subscribers get a fixed amount each month of “Priority Data” at speeds of up to 12 Mbps to 25 Mbps, and, once those data buckets are used up, it pivots to slower speeds — between 1 Mbps to 5 Mbps. For its higher-end tiers, ViaSat also supports an unmetered “Free Zone” from 3 a.m. to 6 a.m., when traffic tends to be the lightest. ViaSat also lets customers purchase more Priority Data for $10 per gigabyte, or discounts if they purchase buckets of 5 GB, 7 GB or 10 GB.

“In the past, most satellite services that are consumer priced have had hard limits to the amount of bandwidth that you can use,” Dankberg acknowledged. “We’ve been testing, on ViaSat 1, service plans that are virtually unlimited. With ViaSat 2, we’ll be able to make those more common, lower priced and with higher speeds.”

The HughesNet Gen5 service offers data plans ranging from 10 GB to 50 GB per month, before speeds are reduced to about 1 Mbps to 3 Mbps. It also comes with a “Video Data Saver” option that adjusts the bit rate to deliver video in DVD quality. Those customers still have the ability to watch in HD by toggling off the Video Data Saver capability. HughesNet’s data policy also includes “Bonus Zone” hours (from 2 a.m. to 8 a.m.), when the customer can use 50 GB per month of free data rather than pulling it from their monthly service plan. HughesNet suggests that Bonus Zone hours are used to download large files such as movies and system updates.

Achieving success in new markets, Heynen of Kagan stressed, will hinge greatly on competitive pricing and the easing of data caps as they face off with competition from wireline internet service providers, as well as emerging LTE- and 5G-powered fixed wireless options that will be capable of delivering hundreds of Megabits of data per second and possibly Gigabit-class speeds.

“As people use more data and OTT, they are going to be very wary of pushing the boundaries of those data caps,” Heynen said. “They have to find a way to make the data caps as well as the monthly pricing reasonable for the service.”

AT&T, for example, is pushing ahead with a big rollout of fixed LTE services. “Out in those rural areas, LTE is a potential competitive threat,” Heynen said, noting that he doesn’t expect satellite broadband to continue to have the most success in its traditional focus areas, serving areas instead without much landline broadband and servicing airplanes and cruise ships.

“I don’t see the cost structure allowing [satellite broadband ISPs] to compete with a traditional DSL, cable or fiber service,” he said. However, he said he does believe satellite broadband services that are equipped with 100 Mbps capability can offer a “reasonable alternative,” particularly as DSL service struggles to deliver speeds any greater than 25 Mbps.

Licking the Latency Issue
Though satellite broadband is poised to deliver speeds that can match up with some of its earthbound rivals, the issue that’s toughest to overcome is latency, which can impact some interactive apps and services such as VoIP and multiplayer gaming.

According to the Federal Communications Commission’s 2016 Measuring Broadband America Fixed Broadband Report, the median latencies of satellite-based broadband services range from 599 milliseconds to 629 milliseconds, versus terrestrial-based broadband services, which range from 12 milliseconds to 58 milliseconds.

“I can’t go against the laws of physics, but I’d like to,” Hughes’s Gulla said. “But the bottom line is that there’s that traveling distance to and from satellite, and at the current distances, you have latency.”

He said Hughes is upfront about that with customers. “We do our best to explain and ask [customers] what they intend to do when they call us. We’re very clear that if you’re doing first-person shooter games, you’re not going to win.”

Other satellite-broadband initiatives are looking to overcome that latency issue.

One prime example is SpaceX, the privately held aerospace firm run by serial entrepreneur Elon Musk. USA Today, citing comments from Patricia Cooper, the company’s VP of satellite government affairs, reported that SpaceX is planning to launch 4,425 small satellites via reusable Falcon 9 rockets to support a constellation of lower-latency, low-earth-orbit birds, alongside a proposal for another 7,815 satellites that are even closer to the Earth’s surface.

Additionally, Airbus is planning a fleet of hundreds of small, low-earth-orbit (about 750 miles above the Earth’s surface) satellites in a joint venture with a startup called OneWeb. According to CNN, the joint venture is eyeing one launch every 21 days from French Guiana, with the first expected to lift off in about nine months. Service via the partnership, which includes backing from Richard Branson’s Virgin Group, Qualcomm and Japan’s SoftBank, is reportedly expected to start in 2019 and to cover the globe by 2020. The FCC approved OneWeb’s request to deliver service in the U.S. in late June.

ViaSat is also casting its eye toward global coverage with its planned set of ViaSat 3 satellites. The first, which will expand and enhance ViaSat’s coverage in the Americas, is planned to launch in 2019, followed in 2020 by a satellite that will cover the Europe, Middle East and Africa (EMEA) region. ViaSat hasn’t announced when it expects to launch its third ViaSat 3 satellite, but it’s slated to provide coverage in the Asia-Pacific region.

Losses in the telco TV sector drove pay TV subscriber losses to record heights in the second quarter, as 812,000 customers dropped their monthly subscriptions, according to research firm SNL Kagan.

According to Kagan, the losses were higher than the previous record – last year’s Q2 loss of about 625,000 pay TV customers. Cable subscriber losses continued to decline: Kagan estimated about 298,000 cable subscribers cut service in the period, a 13.6% improvement and the fifth consecutive year of diminishing losses for the period ended June 30. Satellite TV service providers shed about 26,000 customers in the quarter, while telco losses mounted. Kagan said the heaviest losses were at AT&T, which has been migrating its U-verse customers to its DirecTV satellite platform. Kagan estimated that U-verse customers are down by nearly 1 million since mid-2015.

RELATED: Nielsen says TV universe rose by 2 million homes.

Factoring in the estimated 764,000 customers for Dish Network’s Sling TV service, which Kagan argues is a multichannel video programming distributor, the trailing 12-month multichannel decline is reduced to 853,000.

Poland is steadily leaving the “emerging market” phase of its development, matching or exceeding its Western European counterparts in the use of digital entertainment and boding well for U.S. programmers that made investments in the region, according to SNL Kagan.

According to Kagan, not only have Polish consumers have been buying smartphones and tablets, they are more likely to use them for digital entertainment than consumers in other countries.

A few U.S. companies have dipped their toes in the Polish market in recent years, with Scripps Networks Interactive purchasing one of the country’s leading cable networks – TVN – last September.  Time Warner Inc., has a presence in Eastern Europe with its interests in Central European Media Enterprises and other programmers have shifted their focus to that part of the world to capture a part of the growing TV ad  market.

According to a study conducted in late 2015 by Consumer Insights, 83% of Internet adults in Poland own a smartphone, which is in line with France, Germany and the United Kingdom. At 53%, tablet ownership in Poland is comparable to adoption levels in Western Europe and the country has one of the highest penetration rates for smart TVs in Europe.

Polish consumers are also big users of on-demand content. According to SNL Kagan, 60% of Internet adults in Poland reported using broadcaster or pay TV operator VOD services over the past 30 days, a level exceeded only by consumers in the U.K. (69%). But VOD usage lags those consumers in Western Europe at only 18%. But Polish consumers exceed other regions in their usage of digital content on personal computers. According to Kagan, 41% of PC owners in Poland report using the device to stream video content from an online service, more than twice the level in the U.K. (16%) and Italy (20%) and three times the rate of consumers in Germany (13%) and France (13%). Poland also exceeds the other countries surveyed in streaming video from a pay TV operator’s website (28%), the use of transactional video rental/purchasing services (28%/29%) and streaming online music (49%).

Pay television providers lost a collective 1.1 million subscribers in 2015 according to SNL Kagan, despite gains by some cable companies, which the research firm interpreted as a share shift rather than a retreat from cord cutting.

According to Kagan, the losses were more than four times those in 2014 and it was the third consecutive overall annual drop for the industry.  Kagan added that the sectors showed some signs of stabilization during the latter part of the year, losing a collective 15,000 total customers in the fourth quarter of 2015, matching the losses of the same period in 2014. 

In its monthly subscriber report, SNL Kagan noted that cable operators lost 599,000 total video customers in 2015, its best performance since 2007 when the industry lost 458,000 customers. It was also the platform’s first sub-1 million drop in 7 years. The satellite sector shed 478,000 subscribers during the year to end at 33.1 million customers, compared to a loss of 39,000 in 2014. The telco segment ended 2015 essentially flat, with downward pressure from AT&T's shift away from U-verse to the lower cost video platform of DirecTV weighing on the overall platform’s performance.

A sharp rise in cord-cutters during the second quarter helped drive pay TV customer losses to record highs in the period with the industry losing about 625,000 subscribers in the period, according to SNL Kagan.

According to Kagan, the losses were the heaviest to date, as total pay TV customers dropped to 100.4 million in the period. The losses were mainly driven by sharp declines at satellite TV and telco TV companies, who usually take up the slack for cable losses. Ironically, cable, which has been the focus of much of the cord-cutting hysteria over the past several months, had its best second quarter since 2008 according to Kagan, shedding about 350,000 basic customers. Cable operators lost about 211,000 basic customers in Q2 2008 and on average have shed 609,000 subscribers in the second quarter.

While the second quarter is a traditionally weak one as college students leave school and customers disconnect service as they move to summer residences, Kagan said the slide follows an uncharacteristically weak first quarter, when total subscribers were down by 26,000. That could point toward the possibility of a much larger decline for the full year than during 2010-2014, which was, according to Kagan, “a period of general malaise.”

Kagan’s numbers are slightly higher than previous estimates by MoffettNathanson principal and senior analyst Craig Moffett, who said declines were about 566,000 in the quarter.

Other highlights from the Kagan report include:

•  Telcos increasingly appear to be trading subscriber gains for improved financials. AT&T's U-verse has aligned its strategy with DirecTV’s focus on profitability. As a result of the belt tightening, the combined multichannel video subscribers served by FiOS and U-verse were flat at 11.7 million at the end of the second quarter, behind net adds of just 4,000. 
• The DBS segment lost an estimated 304,000 subscribers, as DirecTV and Dish Network both reported record declines. The DBS segment retreated to just under 34 million subs, according to Kagan.   

RELATED STORY:Exclusive: Mediacom Asks FCC to Limit Retrans Blackouts

Retransmission consent fees are expected to climb to $10.3 billion in 2021, up from $6.3 billion in 2015, according to SNL Kagan.

According to Kagan, U.S. TV station owners have continued to secure higher retrans fees in recent negotiations, with strong advances made at year-end 2014 from renewals and annual step-ups in existing contracts. The gains in retrans fees extracted from distributors also comes as broadcast networks are also expected to grow their reverse retrans fees from stations.

For 2015, Kagan projects reverse retrans could increase from $1.65 billion to $3.69 billion. SNL Kagan shows reverse retrans payments back to the networks growing from 42% to 60% of affiliates' retrans payments over that time.

Although the level of reverse retrans paid back to the networks is rising, both stations and broadcasters are finding room to cooperate, particularly with over-the-top offerings like CBS All Access. These OTT initiatives enable stations to further monetize TV content and act as a hedge against potential retrans disputes and loss of multichannel subs via cord-cutting. 

On average, stations will receive retrans fees of about $1.53 per subscriber per month by 2018, according to Kagan, putting them in the neighborhood of the priciest cable channels. According to Kagan, stations will be ahead of all but five cable networks in terms of affiliate fees by 2018 -- ESPN ($8.80), TNT ($2.16), FOX News ($1.67), FOX Sports 1 ($1.57), and Disney Channel ($1.56). Most RSNs are projected to be significantly above this average retrans fee benchmark for broadcast stations.

TV station mergers & acquisitions volume fell to $7.3 billion in 2014, according to research house SNL Kagan, short of the $11.4 billion recorded in 2013 as consolidation in the sector slowed.

 According to Kagan, five large TV stations mergers worth between $684 million and $2.7 billion were tallied in 2013, but only two such deals – the largest being Media General’s $2.5 billion purchase of LIN Media – were recorded in 2014. Kagan blamed the consolidation slowdown partly on increased Federal Communications Commission regulations regarding broadcast ownership.

Overall, 145 full-power TV stations changed hands, bringing the average price per station to $49.1 million, compared to 286 full-power TV station sales for $38.9 million average in 2013, Kagan said. The average forward seller’s broadcast cash flow multiple for TV stations remained steady at 8.1 times (8.2 times in 2013).

Total broadcast M&A volume reached $8.7 billion for the year, according to Kagan, mainly fueled by a big increase (48%) in radio station deal volume. In total, 258 AM and 501 FM stations were sold, vs. 219 AM and 419 FM stations in 2013. The average price for an FM station rose from $2.0 million in 2013 to $2.5 million in 2014; average prices for AM stations rose slightly from $0.76 million to $0.86 million.