Doug Dawson has an interesting piece this week on advertising and cable companies. Advertising dollars are moving away from TV to online resources, he notes the impact…
What does this trend mean to small cable providers? I think it matters a lot because advertising revenue is a major source of revenue for programmers. To the extent that advertising revenues drop for them there is going to be more pressure for them to raise programming rates to cable companies even faster to make up for the revenue difference.
But that could lead into a classic death spiral. Rapidly rising cable TV rates is one of the major factors in driving people towards alternate programming. Many cord cutters and cord shavers cite the cost of traditional cable as a big reason they are looking for alternatives. The more that programmers raise rates, the more eyeballs they are going to lose, and one assumes the more revenue they will lose.
As if that weren’t enough disruption – think about the impact of online advertising in one of the newer broadband competitors, Google. According to Advertising Age, their fourth quarter ad revenue was $19.1 billion – up 17 percent.