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Broadcast Radio & Television Industry Near-Term Outlook Grim

The Zacks Broadcast Radio and Television industry comprises companies offering entertainment, sports, non-fiction and musical content over television, radio and digital media platforms. These companies majorly derive revenues from the sale of advertising slots as well as subscriptions.

Rapid proliferation of smartphones, improved Internet speed and penetration, and change in consumer viewing pattern have led to the emergence of streaming and video-on-demand services like Netflix (NFLX). This, in turn, has resulted in strong demand for content, which is original, regional, short and suitable for small screens (smartphones and tablets).

Here are the industry’s four major themes:

  • Industry participants are bearing the brunt of coronavirus-induced macroeconomic woes and heightened fears of a prolonged recession. The pandemic has bumped up unemployment, which is expected to increase cord-cutting. Moreover, postponement in production threatens to choke supply of new content. Additionally, advertising is a major source of revenues for this industry, which has been badly hit by the coronavirus. Lower ad demand and reduced spending are expected to hurt the top line in the near term. Moreover, the industry players are facing stiff competition from tech companies like Facebook (FB), Twitter, Alphabet (GOOGL)-division Google and Amazon for ad-dollars. This has been a major impediment for growth, which is expected to continue marring prospects.
  • Increase in cord cutting has forced industry participants to offer “skinny bundles.” These services, which are available through the Internet, often contain fewer channels than a traditional subscription and therefore, are cheaper. The move is in line with changing consumer viewing dynamics as growth in Internet penetration and advancements in mobile, video and wireless technologies have boosted small-screen viewing. The alternative services are expected to keep users glued to their platforms, thereby increasing the need to produce more content. Moreover, coronavirus-led lockdowns

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