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Fitch: Shortened SVOD Window Will Not Accelerate 'Cord Cutting'

20 Mar, 2013 By: Erik Gruenwedel

Ratings firm says increased online access to primetime TV programming will result in 10% to 20% of pay-TV subscribers dropping service

Recent announcements by CBS Corp. that it licensed past episodes and seasons of primetime series “The Good Wife” to Amazon Prime Instant Video and Hulu Plus, respectively, should not accelerate cord cutting among pay-TV video subscribers, according to Fitch Ratings. The subscription video-on-demand deals mark the first time CBS will stream one of its primetime shows still in its first-run.

Heretofore, CBS CEO Leslie Moonves mandated SVOD be limited to catalog programming not currently airing on primetime broadcast.

Fitch said serialized dramas, such as “The Good Wife,” thrive within the SVOD environment, with the transaction setting the stage for similar content monetization. The ratings firm said granting programming rights to SVOD providers so early in the syndication process could lead content providers to anticipate new viewers will be driven to the series’ original telecasts on the network.

“We note that content creators like CBS are expected to remain rational and avoid licensing content that would cannibalize revenues, protecting their long-term franchise values,” Fitch wrote in a statement. “These streaming outlets are opportunities for content creators to add incremental revenues and create an additional player bidding on content for syndication.”

Fitch believes only 10% to 20% of the overall multichannel video program distribution subscriber base is likely to consider “cutting the cord,” opting instead for Internet-based content streamed to personal computers or televisions.

The ratings firm said subscribers most likely to cut pay-TV service include middle-income, low TV consumption, single-person, technology-savvy young households — a reality it says limits the number of viewers that might consider watching video over the Web.

Fitch said cord cutting will not materially affect the media conglomerates' free cash flow generation or credit profiles, and that ratings throughout the next five years would be able to withstand modest subscriber losses. It said CBS’ decision uses "creative windowing" capitalizes on “The Good Wife” syndication value, while enabling “catch-up viewing" across additional platforms, thereby creating a whole new subset of fans.

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