Have we reached the end of Linear Television? Broadcasts remain resilient in the face of struggling streaming economics. But perhaps transition is baked into the industry?
Analyzing the Survival or Demise of Television
For a few days now I have been contemplating the death of linear television and what is actually driving it. In the research I’ve done on the matter I came across some of the very best minds trying to cope with this new direction for media. I have included their thoughts from various places including from a well written and structured CNBC article that certainly went under the radar at the time. I’ll include that in a footnote below. So with that said, let’s push into the future of linear television.
Television is an Industry of Transition
As mentioned in the introduction, the established television model of the last 30 years is slowly dying off. With the proliferation of streaming services, shifting viewer habits, and the latest tech innovations, an evolution is occurring once more. It’s larger than the previous changes, such as the move from black and white to color and less subtle than the minor adjustment to HD and 4K. It should be considered a format change rather than anything else according to Tom Connors from Midnight’s Edge on YouTube.
This metamorphosis in the last few years has industry insiders and media titans making predictions and sharing their perspective on the foggy path ahead. Whether it’s the death of peak TV as predicted by John Landgraf at FX, or it’s Bob Iger considering parting ways with his Crown Jewel, ABC in order to keep his twice a day shower habit intact.
The thoughts of the people making, buying, and selling media are probably worth considering. With that, here’s a look at what some of the most influential figures in the TV world have to say about the next three years specifically. I’ve taken the liberty of paraphrasing their thoughts as well as adding my own and must give credit to CNBC once again for a great article.
The Decline of Legacy Television
Let’s start first with Peter Chernin, CEO of The North Road Company. He believes that legacy TV will continue its decline, but it won’t vanish. Budgets will shrink, and more scripted content will migrate to streaming. Yet he astutely points out that the core of linear TV still revolves around sports rights, and these rights are becoming even more expensive. Even suggesting that the NBA rights deal coming up next year will be at least that costly, in fact it will likely double if not more.
Next up is Kevin Mayer, co-CEO of Candle Media and current advisor for ESPN partners at Disney. Mayer suspects the same fate for television as Chernin, stating that linear TV has a limited lifespan. Specifically for entertainment that doesn’t require appointment viewing, it has already shifted to streaming. He predicts the end of scripted programming on broadcast networks within the next two to three years. Looking at the landscape it is hard to argue with him. Although I think many networks will still need to fill those hours and there is only so much “reality tv” one person can handle.
The curmudgeon, Barry Diller, Chairman of IAC, acknowledges the decline but emphasizes that the tail end of these transitions tends to last longer than expected. I would say that his expertise on things dwindling away is unsurpassed as he watches Daily Beast sink slowly into tabloid territory.
Ann Sarnoff, former Warner Bros. Chairwoman and CEO, cited one important thing for terrestrial viewing. The fragmentation of sports rights is good for leagues but adds complexity for consumers. That’s quite correct and I suspect a problem overall for viewership going forward.
Bill Simmons, founder of The Ringer, takes a longer view. He likens the transition to terrestrial radio’s experience in the face of digital audio. While many predicted the radio’s demise, it’s still here. He anticipates a similar journey for linear TV, with a gradual fade rather than a sudden disappearance. Believe it or not, I agree with him. Linear broadcast TV will never fully go away in my lifetime.
Now, Richard Plepler, former HBO CEO, reminds us that cash flow remains a vital aspect of linear TV’s life. This is undeniable and a primary reason why it will go on. Advertising to the masses in an unskippable way is valuable. I would be remiss if I didn’t add that, linear advertising is truly carrying the load. In fact,traditional linear is literally bankrolling its own competition or replacement and perhaps even demise.
Even Bela Bajaria, Netflix’s Chief Content Officer, acknowledges that the TV landscape is changing, but she doesn’t believe linear TV will vanish entirely. Even at the preeminent streaming service, she understands its continued relevance into the future.
Kathleen Finch, Chief Content Officer for Warner Bros. Discovery U.S. networks, emphasizes that linear TV’s unique attributes, like communal viewing, will ensure its survival.
Byron Allen, Chairman and CEO of Allen Media Group, predicts that linear TV will coexist with other platforms and that local TV and major networks will remain important for sports. He better hope so. He has an empire built on it. In fact he wants to be first in line to acquire all the channels Disney wants to sell.
Chris Winfrey, CEO of Charter Communications, expects that linear TV will survive but with fewer subscribers and higher costs, particularly due to increasing sports rights expenses. This opinion is also telling as the recent carriage settlement with Disney is now a blueprint for all other distribution systems coming up this year. This was also the inflection point for the contraction of channels on cable and satellite providers in the near future.
Now Streaming Takes Center Stage
Streaming services continue to redefine how we all consume media. No one knows this more than Disney CEO Bob Iger. He recognizes this shift and is exploring a variety of strategic options for its linear TV networks, including ABC, Disney Channel, Freeform, FX, and Nat Geo. Linear TV remains profitable, but the impact of cord-cutting is undeniable. As Disney pivots towards streaming, Iger is on the record stating these networks may not align with their core business. Just look at the loss of eight Disney channels from the previously mentioned Charter Spectrum carriage deal. Bob is finally seeing where the wind is blowing with his media brands.
Yet, Iger’s move to potentially spin off linear networks could affect the company’s streaming business, as several shows from ABC, FX, and Freeform are available for next-day streaming on Hulu, and FX produces exclusive content for the platform. In fact Hulu was largely built on next day and live TV viewing of multiple network shows.
Here is where I can’t get behind Bob at all. If there are less and less linear scripted shows produced, and follow along with me, what’s the point of Hulu? Why are you writing a $12 Billion check for it? Why would you remove one of the few sources of production you know you can count on?
To say that, selling these linear networks may create logistical challenges is one thing, but Disney’s strategic direction is firmly focused on its streaming growth. How can you drive that growth reliably if you can’t produce or acquire new and loved products?
I’m sure Bob will be able to explain this to investors and the board, but I would not want to be the one explaining that sale away. Talk about guaranteeing more streaming losses on content acquisition. Darn, if he reads this he may realize his folly. No one tells him okay?
As I stated up front, the TV industry grapples with this transformative change that it cannot prevent. There are many outcomes, but I am not sure if anyone has the correct answer about three years from now, let alone One year from now. Legacy TV will likely continue to find its place alongside the disappointing world of streaming. But at this point who knows for how much longer.
Let us know your thoughts on the matter, down in the comments section below.
