Challenges mount for media companies spinning off TV networks, S&P warns

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The future of linear TV in the U.S. looks increasingly bleak, according to a new report from S&P Global Ratings.
Analysts describe the industry’s decline as “irreversible,” with significant challenges facing media companies attempting to spin off their linear TV networks.
Companies like Comcast and Warner Bros. Discovery are already restructuring their businesses in response to shifts in viewership habits. Comcast plans to spin off its linear TV networks, while Warner Bros. Discovery is dividing its operations into separate linear and streaming divisions to prepare for potential acquisitions or mergers.
S&P’s report outlines a sobering reality: while the decline is gradual, it is inevitable.
“Linear TV’s decline in the U.S. is irreversible, but there is no immediate cliff,” the report noted. “We expect the decline will be a steady one that will take years to reach its final conclusion.”
The report highlights a downward trend in revenue from both affiliate fees and advertising—the twin pillars of linear TV profitability. Affiliate fees are projected to drop by 3% to 7%, depending on network portfolios. Advertising revenue, meanwhile, faces a steeper decline as audience ratings erode faster than the pace of cord-cutting.
While sports-focused networks like those featuring the NFL may fare better than general entertainment networks, even they are not immune. Audience ratings for the 2024 NFL season fell by 2.2%, signaling challenges even for high-value content.
Plans to spin off linear TV networks are fraught with obstacles.
Separating networks from their associated production studios could leave them vulnerable to rising programming costs and the potential loss of key content rights. “Ultimately, the networks would just be distribution vehicles,” the report noted, “leaving them vulnerable to termination of content rights agreements.”
Analysts warn that media companies face a “no-win situation.” While holding onto linear TV networks drains value over time, these networks still generate essential cash flow, which helps fund investments in streaming, pay down debt, and sustain overall operations.
The S&P report underscores broader industry trends impacting traditional media. Cord-cutting will accelerate in 2025, with U.S. multichannel households expected to decline by 9.3%. Meanwhile, advertising dollars and sports rights will continue to shift toward streaming services, further eroding the viability of traditional pay-TV bundles.
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S&P Global Ratings
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Broadcast Business News, Broadcast Industry News, Cable Industry, Market Research Reports & Industry Analysis