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