Subscriptions have succoured media firms during the recession. That may not last
VIACOM, a media conglomerate based in New York, has an unusual response to the downturn: it is launching a television channel. This month Epix will begin showing films from Paramount and MGM, as well as original programmes. It may get off to a slow start, since it has not yet signed up many cable and satellite distributors. But its creation points to one of the media business’s few bright spots.
Having fallen steeply after the collapse of Lehman Brothers in September 2008, the shares of all the big American media companies have outperformed the market since March. But recession has struck some parts of the industry much harder than others, changing its shape. As a rule, media products that are sold in shops—CDs, DVDs and magazines—have suffered. Advertising is showing only tentative signs of recovery. The kind of media for which people pay a monthly bill, in contrast, has not only held up better but has in some instances prospered through the downturn.
Cable and satellite television was a good business going into the recession and is now triumphant. In the year to June 30th Britain’s BSkyB added more subscribers, obtained more revenue from each customer and reported more profit than the year before. Discovery Communications, which derives almost all of its revenue from cable, notched up a 13% increase in profits in the second quarter. In the past year the fortunes of big media groups have depended largely on the proportion of their revenues coming from pay television.
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