No, Henry, TV is Not Going The Way of Newspapers

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The television industry is undoubtedly facing a lot of disruption and uncertainty in its future, but it’s nowhere close to facing the same kind of bleak future as most of the newspaper industry.  Last week, in a now-(in)famous column -- “Don't Mean To Be Alarmist, But The TV Business May Be Starting To Collapse” -- Business Insider’s Henry Blodget suggested the television industry looks very much like the newspaper industry did in the moments before their businesses started to collapse. Henry’s column sparked scores of response pieces in the trade press, blogs and on Twitter.

The column also ignited comments and responses in several high-profile industry events last week. Luma media banker Terry Kawaja kicked off a panel at Google’s Insight conference with it, igniting an argument. At the Paley Center’s TV 3.0 conference, Irwin Gottlieb of Group M (WPP) was pressed about the column by CNN’s Erin Burnett, and responded with his best modern-day Clarence Darrow-style refutation. In subsequent Paley sessions, the column was mentioned by by TiVo’s Tom Rogers, Discovery’s David Zaslav and ESPN’s John Skipper. Each acknowledged the piece was a bit reactionary, but contained kernels of truth.

While I think the world of Henry Blodget (and, full disclosure, am an investor in Business Insider), I don’t think that what the television industry is facing today looks anything at all like what newspapers started to confront 10 to 15 years ago. Here’s why:

Strong overall revenue growth. More money is spent today on TV advertising in the U.S. than ever before, and it is growing faster than the GDP. That hasn’t been the case for newspapers for a very long time.

Strong content investments. The TV industry spends significantly more on content as a percentage of its overall revenue than newspapers by far. As much as folks in TV complain about the escalating costs of programming and talent, they keep paying it. Not so newspapers. Many newspaper companies in the U.S. spend less than 20% of their total expenditures on their newsroom.

Easier digital transition. TV programming has been electronically distributed since its birth. Newspapers today still rely on newsstands and kids on bikes hauling ink-on-dead-trees for most of their revenue-generating distribution. Certainly, it’s a whole lot easier to transition your media product to digital when it’s already electronic.

Oligopolies transition to competition better than monopolies. Local newspapers have largely been local printing, distribution and advertising monopolies for years. It’s been decades since you’ve needed more than two hands to count truly competitive two-newspapers cities. Not so for TV. Every major market in the U.S. has multiple TV entrants. While they’ll never be confused with nimble tech start-ups, competition among the oligopolies has kept TV stations much leaner and much better poised to fight new digital competition.

Entertainment, news balance. There is a lot more media money in entertainment than news. The TV world has the benefit of being 75%+ weighted toward entertainment content, whereas newspapers are probably 75%+ weighted to news. Folks pay a whole lot more each week for ESPN, HBO and Netflix than they do for their newspapers.

Does this mean that I think TV companies have an easy road ahead of them? Absolutely not; audience fragmentation is having a significant impact on the efficiency of their ad products, and operators will certainly face stiff competition from over-the-top, Web-based companies. Some may not make it, but those that survive will probably be splitting an even bigger market. That is not the future facing newspaper publishers. What do you think?

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11 comments on "No, Henry, TV is Not Going The Way of Newspapers".

1. Paula Lynn from Who Else Unlimited
   

   commented on: June 14, 2012 at 7:02 p.m.
   Newspapers: Create content from within and sell ads to support it although many content creators (writers, editors, publishers) deny the importance of ads. TV: Content created from studios either subsidized by networks/channels/distributors and stations/networks/channels sell ads to support content through their distribution.
2. Tod Sacerdoti from BrightRoll
   

   commented on: June 14, 2012 at 7:05 p.m.
   Dave Morgan has become the advertising industry's premier flip-flopper. In 2006, when he was running a digital ad company, he wrote in Adage "The digital revolution is not just impacting the web; it's impacting television...and will almost certainly be fully digital within a decade. This will fundamentally change how they operate. " Now that he financially benefits from television advertising, he is their go to whipping boy. My vote is to leave flip-flopping to the political candidates and have a honest discussion about digital.
3. Dave Morgan from Simulmedia
   

   commented on: June 15, 2012 at 6:11 a.m.
   You miss the point Tod. I did believe, and continue to believe that TV will become fully digital. It is happening before our eyes. 15 years ago, no TV set top boxes were digital. Today, every new one is. 15 years ago, most TV's received analog signals and had tubes. Today, they are all massive HD digital computer monitors. The fact that TV is successfully transitioning to digital is why I shifted my career from the web to TV. I do not know what bone it is you have to pick. My beliefs and my bets are totally transparent. TV is becoming digital. It is not going to the web. However, digital web ad technologies are coming to TV and combining the best of both. That is what I believe. That is what I write. That is where I have staked my bets.
4. Ted Rubin from Collective Bias / The Rubin Organization
   

   commented on: June 15, 2012 at 8:18 a.m.
   Totally agree... and social is adding to the value of TV viewing and helping viewers to be a more a part and feel like they are being social while watching instead of being a loser who is sitting in his case being anti-social. Very big for them and social usage and great to see social being embraced in that space.
5. Nick D from ___
   

   commented on: June 15, 2012 at 9:25 a.m.
   You missed one essential factor: consumers don't use online video in the same way as TV.
   TV is a big box with one purpose; you turn it on, you sit down, you flick through the channels. Online, in comparison, is much more active: you search for what you want to watch, you see if it's any good, you decide whether to watch it or not. Internet bandwidth restrictions and the practicalities of screens (laptops and tablets just aren'tas convenient for sharing in a living room) means that the TV isn't going away; instead, people use online video very much as a supplement to television.
   Unless Blodget's talking about video in 20 years time, but hey, we'll all be out of jobs then! ;c)
6. Herb Lair from CUO,Inc.
   

   commented on: June 15, 2012 at 10:38 a.m.
   Offsetting content costs via targeted ads will determine TV future - I can see Apple TV, Amazon, Walmart, Microsoft, and Google impacting TV in much the same way as music and news media Link addresses opportunities https://sites.google.com/site/cuoirent/news-releases/behavioralbasedsocialmediasystemforthecabletvmarket Excerpt from above link on February, 2011 Business Insider Identifies advertising market being missed by Cable TV operators “Advertisers have weighed in heavily on the future of TV, with both their thoughts and their considerable wallets. Advertisers are increasingly expecting to present their advertising messages to just their desired audience…and not to anyone else. For over 60 years, video advertising could only be bought via a TV show’s projected audience, which served as a blunt proxy for a certain target audience. The result has been many wasted impressions and an often irrelevant experience for consumers. In the near future, advertisers will demand the ability to target their messages to people rather than targeting their messages to TV shows as proxies for people.”
7. Doug Garnett from Atomic Direct
   

   commented on: June 15, 2012 at 6:06 p.m.
   @Herb - I find this part of the quote you included odd... "Advertisers are increasingly expecting to present their advertising messages to just their desired audience…and not to anyone else." Because that's really NOT what happens online. Consider, in a strong media world, media charges higher prices for better targeting. But on the web, we're charged far, far lower prices - because web targeting is a mythology. Web targets continue to be defined by an extraordinarily narrow group of descriptors - ones that aren't very important when it comes to likelihood of purchase. Here's some more in-depth comments I've written about the myth of web targeting. http://dsgarnett.wordpress.com/2011/02/28/what-happened-to-the-webs-promised-land-of-targeted-advertising/
8. Herb Lair from CUO,Inc.
   

   commented on: June 16, 2012 at 6:31 a.m.
   Complete article, again written by Henry blodget, not me, as far as quote included - with all the time shifted, non-sports programming, it appears targeted ads from cross-indexed social media is a way to offset content cost and eliminate ads of no interest. Google is 100% ad supported and wouldn't be effective if targeted ads didn't work for them. facebook catches sales opportunities at the earliest stage, more preferences and behavioral marketing, something that will be extremely imporatnt to monetize. http://www.businessinsider.com/jason-kilar-here-are-my-thoughts-on-hulu-and-the-future-of-tv-2011-2 Excerpt from above link on February, 2011 Business Insider Identifies advertising market being missed by Cable TV operators “Advertisers have weighed in heavily on the future of TV, with both their thoughts and their considerable wallets. Advertisers are increasingly expecting to present their advertising messages to just their desired audience…and not to anyone else. For over 60 years, video advertising could only be bought via a TV show’s projected audience, which served as a blunt proxy for a certain target audience. The result has been many wasted impressions and an often irrelevant experience for consumers. In the near future, advertisers will demand the ability to target their messages to people rather than targeting their messages to TV shows as proxies for people.”
9. Doug Garnett from Atomic Direct
   

   commented on: June 17, 2012 at 2:01 a.m.
   I disagree about the idea that Google wouldn't make money if targeted advertising didn't work. Truth is, Google is primarily making money because they provide internet advertising. So they'd be in deep trouble if people came to believe internet advertising didn't work. Within that, they've created a belief (yes---PERCEPTION) that web targeted advertising works. Yet the fundamental problem remains: If highly targeted media opportunities work, then you can charge far more for them. But since Google charges far less to reach someone, it's quite likely they're succeeding DESPITE web targeting's ineffectiveness rather than BECAUSE of it.
10. Herb Lair from CUO,Inc.
    

    commented on: June 17, 2012 at 5:24 a.m.
    I disagree - we're in the analytics of big data - personally the only ads I pay any attention to from Google, or others, are those targeted and triggered by an interest that I have expressed. They charge far less because they get better preference and behavioral data for free while traditional marketing companies based on obsolete demographic data pay much more and have to contend with privacy issues that have been avoided by social media and searches http://www.measuring-success.com/archive/ Excerpt - "What makes Google the omnipresent $21 billion leviathan company it has become? While its search engine and its application suite is impressive, Google’s key to success is its ability to mine data on customers that use its products for free. This data is used to put the right targeted ads in front of its customers for which advertising companies pay a hefty premium. This optimization requires a dedication to data tracking systems and analytics that explain consumer behavior and interests. And it’s not just Google. Despite the difficult economic times of the past few years, data analytics has ranked in companies’ top 3 areas for investment because, like Google, they recognize that the key to success is the ability to get smarter about their customers."
11. Doug Garnett from Atomic Direct
    

    commented on: June 20, 2012 at 7:30 p.m.
    Targeting absolutely works. But that's not what we're talking about. Instead, we're talking about the very limited type of targeting we can leverage through the web. Does THAT targeting deliver a massive increase in economic power for our ad dollars? I don't think so. And, "everybody's doing it" isn't proof that it works - merely proof that Google's sold it with tremendous savvy.

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