Coming, broadcast TV’s big comeuppance
The broadcast networks are heading into a strong upfront market
May 9, 2016
By Court Stroud
Of course everyone laughed.
Les Moonves was crowing about the flush of money CBS was making on this election, and the CBS CEO knew precisely who to thank — Donald Trump.
“This is fun,” Moonves told attendees at a recent Wall Street gathering. “This is going to be a very good year for us. Sorry. It’s a terrible thing to say. But bring it on, Donald. Keep going.”
Trump may not be good for America, Moonves opined, but he’s damn good for CBS.
It was classic Moonves. It was the sort of bluster we hear each year from network executives heading into the broadcast upfront market, when the bulk of TV ad time is auctioned off.
And Moonves had good reason to be ebullient, with analysts predicting a strong broadcast upfront after a tepid 2015 market.
Here we are in 2016, and it was just like the old days. TV is still king.
Except it isn’t.
The digital revolution that’s swept through so much media has largely spared TV, but not for much longer. TV, broadcast in particular, is under challenge as newspapers were a decade ago, and like newspapers the broadcast networks are not going to meet that challenge.
The networks are not equipped to. It’s simply not in their culture. They have no experience in taking on and defeating competitors. It’s a largely risk-averse and complacent industry. It’s always been so.
A perfect analogy is Detroit years ago. Challenged by imports, the Big Three, Ford, GM and Chrysler, puttered on as always, dismissing these new competitors, dismissing consumers’ demands for smaller, safer, fuel-efficient cars, even as their market shares tumbled.
They just couldn’t change, and they didn’t. Chrysler and GM eventually landed in bankruptcy.
Television, challenged by the likes of Netflix and all the other new competitors for viewers’ attention, has made some defensive moves, but we see no grand strategy in the works to best these interlopers. We are not going to.
Fact is, the networks have seen their share of audience declines for years and have largely accepted those declines. These new competitors will only speed up the process of erosion.
That process is already well underway. Primetime is down 7 percent this season among adults 18-34s, according to Nielsen, about a quarter lower than it was a mere four years ago.
What we are seeing today is a transformation of media by invasion as outsiders, most often technology companies, move to invent newer, smarter ways to transmit and access media, and their names are all quite familiar, with Apple, Facebook and Google leading the pack.
Unlike media companies, tech companies are driven by risk-taking and innovation. They are fiercely competitive.
Media and technology are merging to become one industry, with the big players in technology being the drivers of change and innovation.
It’s only a matter of time before ownership of media moves more and more into the hands of tech giants and other outsiders.
It’s already well underway. Comcast, the cable giant, purchased NBC Universal. The largest shareholder in Disney is the estate left by Apple founder Steve Jobs, and it might be just a matter of time before Apple takes over Disney. Amazon founder Jeff Bezos bought the Washington Post.
One has to wonder how much longer it will be before a Google or some other tech player swallows CBS.
In the end, the digital revolution will prove good for the television marketplace. Good for everyone: viewers, ad agencies, clients and even media companies, especially the media companies.
Court Stroud is a writer and a longtime media executive who has worked for companies such as Univisión, Telemundo and several digital startups. He most recently served as Azteca América’s EVP of network sales and digital. Stroud holds degrees from UT-Austin and the Harvard Business School. Follow him on Twitter: @CourtStroudNYC
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