OnScreen Summit 2011: Reif Cohen's Bullish on Content

With demand for content at all time highs, advertising revenue rising at a healthy clip and the emergence of international markets, there has never been a better time to be in the content business, influential Bank of America Merrill Lynch media analyst Jessica Reif Cohen said at the fourth annual OnScreen Media Summit here Thursday.

"I don't think the TV production business has ever been this healthy. There is massive demand for content both domestically and abroad," Reif Cohen said in an interview with Multichannel News editor-in-chief Mark Robichaux.

Reif Cohen called the outlook much different from 2009, when a decimated economy helped drag down the global advertising market. The difference in the past few years has been the emergence of cable as a significant buyer of content and substantial growth of international TV markets. She added that while broadcast advertising has dominated internationally, as cable penetration has risen, advertising dollars have shifted.

Technology has also played a role, Reif Cohen said: video-on-demand and online distribution has increased the value of hit shows by about 50%, to $1 billion. "And there are a lot of hit shows."

While content creation is enjoying its days in the sun, distribution has taken it in the chin with increased competition and the emergence of online outlets like Netflix into the mix.

Reif Cohen praised cable operators for losing fewer video customers than in the past -- and for introducing economy packages for cash-strapped customers.

While rising programming costs will continue to put pressure on what distributors ultimately charge their customers, cable operators especially have plenty of room in other products and services including broadband, business services and addressable advertising.

Reif Cohen said that cable broadband penetration across the country is about 30% and should be double that amount, leaving plenty of leeway for operators. The small and medium-sized business market, still in its infancy, is growing revenue at a 20% to 40% annual clip and has substantially higher profit margins than residential service.

Addressable advertising, so far slow on the uptake, has shown promise on the local front and represents an enormous revenue opportunity for operators.

Not to forget broadcasting companies, Reif Cohen said that retransmission consent revenue has saved the industry. And with reverse compensation payments from affiliate stations beginning to trickle in, the outlook looks good.

"The reason we like broadcast networks is that we see visible payments from pay TV of between $400 million and $800 million over next four-to-five years per network," Reif Cohen said. "Those are very significant dollars."