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Analyst: Bundles Will Be ‘Pruned’

NEW YORK — The increasing popularity of subscription video-on-demand services, over-the-top offerings and a trend toward thinner video packaging means current content models will have to be altered, according to a top media analyst — at the expense of rate hikes for programmers.

“The video bundle will have to be pruned,” Bank of America Merrill Lynch media analyst Jessica Reif Cohen said at the Next TV Summit here. “The days of double-digit affiliate fee increases are over. I think there will be price roll backs or channels will be dropped.”

In a sweeping conversation with Multichannel News and Broadcasting & Cable editorial director Mark Robichaux, Reif Cohen said although so-called skinny bundles are all the rage — smaller video packages from Sling TV and Verizon Communication’s FiOS TV have grabbed headlines over the past six months — they aren’t economical enough to make a dent in the traditional programming model.

Reif Cohen echoed what other analysts have said regarding smaller video packages — they’re too expensive when stacked up against the traditional offerings from cable and satellite services. But she also said superiority probably won’t last forever, adding that the traditional bundle should remain intact for three to five years.

And when skinny bundles begin to make a dent in the traditional model, Reif Cohen said, the service likely to come out on top is one owned by three top traditional programmers — Comcast, 21st Century Fox and The Walt Disney Co.’s Hulu.

“They have it all,” Reif Cohen said of Hulu’s content-rich parentage.

Outside of OTT competition, programmers that have stumbled have done so because they failed to invest in the business and reinvent themselves, Reif Cohen said. She pointed to Turner Broadcasting System as an example of a programmer that took a proactive stance, investing heavily in an NCAA Men’s Basketball partnership with CBS Sports that had some high initial upfront costs but in the long run has proven to be successful.

“Turner was smart,” Reif Cohen said. “They invested early, took their losses, and now look how well they’re doing. They went for a marquee product that you had to watch live.”