Significant subscriber churn driven by economic pressures on pay TV households due to the pandemic weighed on the second-quarter earnings results of top cable network programmers as total distribution revenue dropped 3.9% year over year to $10.39 billion.
Although distribution revenues during the period fell to their lowest in the last year, the brunt of COVID-19's disruption leaned more heavily on the advertising side. All of the major cable network programmers we tracked for this analysis saw big revenue drops from their advertising streams, but Discovery Inc., Walt Disney Company and Fox Corp. managed to deliver revenue growth from their distribution streams. Recent carriage deals with traditional and virtual multichannel video programming distributors and contractual rate increases have helped some of the cable network owners offset the impact of the pandemic as well as the prevailing industry trends of cord cutting and cord shaving.
The second-quarter earnings results delivered by the top cable programmers offered a first look at the full impact of COVID-19's disruption on their dual revenue streams. While a lot of uncertainties surrounding the pandemic remain, company executives have clearly signaled on their earnings calls that the business priority has shifted to growing direct-to-consumer products.
NBCUniversal combined its television and streaming business, which, according to CEO Jeff Shell on the earnings call, would allow the company to rapidly shift resources and investment from linear to streaming after the launch of Peacock nationwide in July. Similarly, WarnerMedia is in the middle of a major restructuring as it gears up for the launch of an ad-based video-on-demand version of HBO Max in 2021. Disney and Viacom are planning to leverage their wide library of content and entertainment brands to power up international streaming products, while Discovery is putting finishing touches on a new U.S. streaming service.
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Cable network Q2'20 distribution revenue recap KAGAN