COMMENTARY

What Is A Cable Network Worth Now?

• by Wayne Friedman , Staff Writer, September 23, 2021

With all the hype around new fancy streaming platforms that seemingly everyone wants, let’s talk about what remains: What’s the value of a typical U.S. cable TV network -- and does it matter?

If you are a top AT&T executive, you probably believe it’s a bit less than you might think -- in terms of WarnerMedia and its HBO Max streaming service.

John Stankey, CEO of AT&T, says that with regard to its streaming business HBO Max, AT&T is pleased with its progress. He added this at a recent industry conference: “But we need that global momentum.”

And that’s where the potential spinoff of WarnerMedia merging with Discovery Inc comes in.

“It's trading right now like a cable network asset, if you kind of look at the evaluation within the stock,” he said.

“My belief is, as we get through this, we should see that [value] multiple start to recognize the fact that there's a great direct-to-consumer business. That it should be valued in the same way the market is valuing other great direct-to-consumer businesses, given the prospect that's in front of it.”

All of which reflects back to cable network's piece of any major media company that owns one. You might have a great legacy TV cable entertainment-focused network. But that’s not what investors -- and consumers — want in the near term.

The original warning sign came in 2015 with perhaps the top U.S. cable network -- ESPN -- with its declining subscribers. Since then, the Disney-owned network made a significant and relatively rapid expansion to a streaming service, ESPN+, which now has 15 million subscribers.

A worse predicament comes when your new premium streaming service isn’t up to par in a business sense -- that it might need much more business clout. Apparently, that’s where HBO Max sits.

Scores of lesser-profile premium streaming services are hoping they can make up ground -- perhaps as niche services. Are they just treading water, looking for a big global or U.S. merger partner to grow their business value far more quickly versus their declining legacy, cable TV network? Oh yes.

If this condition is widespread in the modern TV industry, you can see why there is much urgency -- and possible panic -- among media and entertainment and communications executives.

Whether you are Walt Disney, ViacomCBS, or NBCUniversal, there will be an added question that businesses will be asking for years to come with  regard to streaming: What becomes of your cable TV networks?