Nomura media analyst Anthony DiClemente says there was a eye-opening 12.7% decline in traditional linear TV viewing in January: "One of the worst declines we have seen since we launched coverage of these companies... Netflix, Amazon Instant Video and Hulu continue to siphon viewers away from linear TV."
Viacom collection of networks was down 23%, and Disney cable networks, including ESPN, lost 7.5%, said DiClemente. Bernstein media analyst Todd Juenger also has been warning about SVOD viewing dinging cable networks for sometime. He points to an 8% drop across all cable networks for 2014.
We understand all this, as well as how other media might be contributing. But what we don’t have is details of viewing trends for all TV viewing — not the least of which is clouded from SVOD providers like Netflix and Amazon who aren’t interested in providing/securing traditional TV viewing rating data.
Decades ago, when broadcast networks were under attack from growing cable companies, many could point to Nielsen for some decent assumptions. And yes, we all know critics have complained loudly about Nielsen’s shortcomings in specific areas for years. But at least we had some apples-to-apples guidance.
Now with new digital platforms? It becomes much harder. We all assume lower traditional TV viewership for both broadcast and cable means TV viewers are doing other media stuff. But those broad broad generalizations aren’t enough.
Others might point to singular TV data points — like the recent Super Bowl’s new record 114.4 million viewers, or the strong Fox drama “Empire” that rose in its first weeks — as a sign not all is over in traditional TV-land.
No matter. What we are left with are specific issues about traditional TV media companies trying to examine their own content usage.
Said Howard Shimmel, chief research officer at Turner Broadcasting, at a recent TV measurement conference: “The fact that we don’t have the ability to look at a telecast of a show or the flight of a series…and don’t understand the (audience) behavior is really sad.”
For many, TV measurement is still in the dark.
Is this decline in linear TV cyclical or secular? Is following younger audience habits following the money? TV sells $60B+ in ads, is TV measurement still in the dark? Are national advertisers in the dark like Heineken shifting 25% of their ad budget to digital? Can linear TV broadcast networks compete with hundreds of svod and vod apps on a mobile phone transmitting through Wi-Fi? Can linear TV broadcast networks succeed in scenarios of national advertiser's budgets allocations going 40%-60% to digital? Can linear TV broadcast networks count on double digit retransmission fee growth when payTV bundles are flat-lined and the broadband subsidizing retransmission fee growth conversation is around the corner with the net neutrality debate? Are linear TV broadcast networks positioned to take market share in mobile and display advertising?
Some of your questions are well put, Leonard. There are aspects of TV audience measurement that need to be improved upon, including reporting accurately on all of TV's audience, not just the in-home "linear" portion of it. As for your questions about TV broadcast networks being able to count upon increased retransmission fees, that is certainly the case in the short term, due, largely, to their total day schedules, including early morning, daytime, early news and late night fare. The same is true of the many cable channels which garner half of their incomes via cable/sattelite distributor fees---all paid for by the viewer. Until a massive revolt----which I don't see coming---occurs and tens of millions of homes refuse to pay, there will be some attrition, but not the demise of "linear TV". Regarding advertisers bailing out on "linear TV", this isn't going to happen until great globs of audience tonnage switch to digital, not the relatively small numbers we are now seeing. To make this happen, the digital players will need tons of alternative programming, not just a few "good" shows. That's not a likely outcome for the immediate future---like the next five or ten years. And rest assured, once the "linear TV" guys see such a trend developing----or, maybe before----they will jump in and buy up the digital venues that are stealing their viewers--or, as is now beginning to happen----develop their own 'line extenders".
Ed your reply has several large holes. The digital players that really count today have an order of magnitude of cash and stock currency on their balance sheets that is far greater than all the major TV broadcast networks combined so competing on an M&A basis looks very weak. Regarding digital and alternative programming, you miss the point of audience aggregation on digital- its a plurality of touchpoints not just tied to one piece of programming that brings the audience. Retransmission fee growth is being paid by the consumer but the growth is being paid by the broadband consumer not payTV consumer. Advertisers are not bailing out on TV, they are shifting ever larger allocations to digital and what is the sensitivity to allocation of 40-60% of digital? Heinken buying in at 25% will only increase further. Major broadcast TV networks have never had to compete on an audience fragmentation field where everyone has the same access to the same technology (an open ecosystem of apps, wi-fi, mobile devices ) and just don't have the DNA to do so. How it will shake out depends on how a major TV broadcast network embraces technology and brings to bear an innovation no one else has (differentiation) which enables audience aggregation. To date the major broadcast TV networks are poorly positioned within the infrastructure side to win the day with the perception of "must have TV programming" will win when anyone on the planet with an internet connection can get any content.
I happen to agree with you, Leonard, about some advertisers diverting some of their dollars to digital, mainly in the form of video ads. This seems to be one of the possible explanations for the recent softness in broadcast network time sales and even cable is being affected, but to a lesser extent. Again, the point where we part company relates to the timing and the extent of these shifts. It is important to recognize that 65- 75% of "linear TV" viewing occurs in non-prime hours and most of these generally "pap" laden dayparts are clogged with CPM focused advertisers. Also, a substantial part of TV fare ----news, sports, special events---- is bought, not so much based on audience size and CPMs---which, invariably are higher----but on a desire to showcase ads or sponsorships in such "image enhancing" or buzz generating and merchandisable vehicles. This kind of program content is not going to be available in digital for a long time. So that leaves us with primetime entertainment fare on the broadcast networks, which accounts for only 10-15% of a typical adult's total TV consumption. Here, of course, the networks are vulnerable, but even if 25% of this viewing defects to other venues, along with some losses by cable, the overall impact will not sound the immediate death Knell for "linear TV"------- it's got too many irons in the fire to suddenly cave just because some people start to reduce their primetime exposures. I also agree, that the networks have lagged well behind in recognizing the potential of digital and I expect them to make strong moves to rectify this situation. I think that the basic problem we have in this ongoing debate is the assumption that all people are just like us in their desire for "better" content and their disdain for "pap". That is true for some but, I'm sorry to say, many people----even "millennials"---- are just fine killing time with the endless and redundant "talking head" news shows, daytime gabfests, game shows, low budget documentaries, so-called "reality" stuff, soap operas, old movies, sitcom reruns, etc. Until that changes----if it ever does-----one must count, in large part, on an elitist minority to support "quality" content on digital, and this may not be a viable premise, no matter how much money the major digital players have.