Linear TV Network Spinoffs Encounter 'Sizable Obstacles' According to S&P
In the ever-changing landscape of media, traditional linear TV networks are facing significant challenges as they navigate a decline in viewership and revenue. This shift, driven by cord-cutting, ad avoidance, and the growing preference for streaming services, poses a "no-win situation" for media companies, according to industry experts.
The Challenges
The decline in linear TV is directly impacting affiliate fees, advertising revenue, and complicating content rights agreements. Cord-cutting is causing a shrinkage in cable advertising revenue, as seen with Comcast's cable ad revenue declining by 7% in Q2 2025. Networks like MSNBC and USA Network are facing reduced income from traditional sources as audiences fragment and advertisers seek digital alternatives.
Eroding brand identity and audience fragmentation are also significant concerns. Networks must maintain core viewer loyalty while appealing to younger, digitally native audiences who favor online news and podcasts. MSNBC's rebranding to MS Now and shedding the NBC peacock logo is an example of this challenge.
Content rights and programming shifts are another hurdle. Networks need to manage costly content rights in a shrinking market while innovating programming to differentiate their offerings, particularly in news and sports.
Digital and streaming competition require strategic resource allocation and operational changes. Media companies must balance legacy linear assets with investments in streaming services, such as Comcast’s Peacock.
The Future Outlook
The future success of linear TV networks depends on adapting to digital-first consumption, innovating revenue models beyond affiliate fees and ads, and managing content rights efficiently in an increasingly streaming-dominated media landscape.
Networks will increasingly improve digital products, expand streaming offerings, and develop platforms that allow direct engagement with consumers. Fox’s growth with Tubi illustrates this potential.
Independent linear TV units may pursue acquisitions or mergers to scale and diversify revenue streams, leveraging digital assets and niche content verticals.
The shift from walled garden digital advertising to more transparent networks and retail media may create new revenue opportunities, although competition is fierce.
Content and brand reinvention aim to capture new audiences while retaining loyal viewers. However, losing strong legacy identities, such as NBC's branding, poses risks for recognition and affiliate leverage.
Notable Developments
Warner Bros. Discovery's restructuring aims to better position the company for acquisitions or potential mergers. The company is restructuring into two divisions, separating linear networks from streaming operations.
Comcast has announced plans to spin off its linear TV networks, with the networks primarily functioning as distribution vehicles, packaging content licensed from third parties into a linear stream and selling them to pay-TV distributors.
The NFL is not immune to ratings declines, with audience ratings for the 2024 NFL regular season declining by 2.2%. Despite this, sports-focused networks are expected to stabilize or modestly grow in audience ratings and ad inventory prices, particularly for the National Football League.
In conclusion, while the decline of linear TV presents significant challenges, the future success of these networks lies in their ability to adapt to the digital age, innovate revenue models, and manage content rights efficiently in the streaming-dominated media landscape.
[1] S&P Global Ratings predicts the decline of the linear TV business in the U.S. to be irreversible. [2] The dependence on linear TV networks for funding will decline over time as the streaming segment grows in scale and profitability. [3] The media companies are in a "no-win situation" as holding onto linear TV networks makes them less valuable each day. [4] The key challenges for media companies spinning off their linear TV networks stem from the ongoing decline in linear TV viewership and revenue. [5] Losses from cord-cutting are moderating, but affiliate license fees are expected to decline by 3% to 7%, depending on the network portfolio.
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