We’ve received many questions about the recent changes with the Jimmy Kimmel show. Below is a summary of insights from Parks Associates. Disney’s biggest risk is short-term advertiser pullback or pressure on its linear TV business, but large-scale subscriber losses for Disney+ or Hulu are unlikely but possible. Annualized churn rates for vMVPD and streaming services on average are 30% and higher. Parks Associates shows churn rates for Disney, Hulu, and ESPN+ are relatively low at 17%, 16%, and 9%, respectively.
Nexstar is the biggest owner of local TV stations in the U.S., and in some markets, those stations air ABC shows through affiliate agreements. Since Disney owns the ABC network (since 1998), backlash regarding the situation could create subscribers to churn and leave its service(s) or add subscribers who want to support the parent company. Parks Associates research estimates these subscribers’ numbers for each service in the US market:
- Hulu – 51 million
- Disney+ - 52 million
- ESPN+ - 24 million
Local TV stations (across all networks, ABC/CBS/NBC/etc.) are seeing ad revenue declines in many markets, especially as cord-cutting increases and competition from streaming rises. Parks Associates shows that 46% of households are cord cutters and now, 89% of all households watch streaming services. Forty-two percent of all US households still watch traditional pay TV.
In video entertainment, knowing your audience is everything and is key to attracting advertiser dollars. Local broadcast network owners like Sinclair and Nexstar are more reliant on broadcast and traditional pay TV than Disney-owned ABC. Their primary revenue is driven by retransmission fees and local advertising, while Disney's diverse business model provides insulation from broadcast and pay-TV trends.
Older consumers, who tend to be more conservative, make up more of the base of broadcast and pay-TV services: 47% of traditional pay-TV subscribers are aged 55+ compared to just 28% of Hulu subscribers, which Disney owns and also airs ABC content. With an older base of viewers, who tend to be more conservative, Sinclair and Nexstar are trying to protect their advertising base while Disney has a younger, more diverse audience across its offerings.
Time will tell if this particular content fight will impact viewership, but Sinclair and Nexstar have more to lose due to their precarious position in the market as the entertainment world shifts to streaming-first models.
If there’s public backlash against ABC/Disney due to show suspension (e.g., Jimmy Kimmel), it could affect viewership of ABC network programming locally. This could then affect ad rates or demand for slots on local ABC stations, especially in markets where ABC-affiliated stations are strong or high-rated.
