Kagan: Basic Bouncing Back

Basic-cable networks have apparently recovered from the advertising-market meltdown of 2001, according to a recent report by Kagan Research, citing $9 billion in cash flow in 2004 and strong margins of 34.1%.

In a press release, Kagan estimated that basic-cable ad revenue would grow at a 12% annual clip during the next five years, reaching $47 billion by 2009. Kagan senior vice president Derek Baine predicted that cash flow would rise 16.4%, giving the networks an average cash-flow margin of 41% in 2009, up from a projected 35% in 2005.

According to Kagan’s just-released “Economics of Basic Cable Networks 2006”:

• The 10 most widely carried networks averaged 88.7 million subscribers in 2004, up from 88 million in 2003.

• Ad revenue is expected to grow at a compound annual growth rate of 13%, with license fees up 11.6% per year and other revenue growing 9.1% annually.

• Aggregate sector cash flow is estimated to rise at an annual growth rate of 16.4%, bringing total cash flow from $10.4 billion in 2005 to $19.1 billion by 2009.