Commentary

What's The Future Value Of Ad-Supported TV Platforms?

Editor's note: The following column first ran in late 2014, but covers an issue that's still very relevant.

Arguments have raged for years over financial formulas for after-market sales of TV shows.

One formula came through the budding syndication marketplace in the late ‘80s and early ‘90s. Then U.S. media gained strong influence internationally, and revenues also came from U.S. cable networks. Now there has been a move for many to non-advertising-based platforms.

Some now wonder how much big media content creators can expect from advertising-supported after-market TV marketplaces in the future.

Chase Carey, president/chief operating officer of 21st Century Fox, said recently: "The ad-free platform has more value than an ad-supported platform, certainly at this point in time.”

Carey noted that consumers increasingly want ad-free content. They’ll pay for it on the likes of Netflix, Amazon or Hulu. A prequel to all this was the DVR, with just about half the country regularly time-shifting their daily TV entertainment behavior. Yes, time shifters still see some advertising, but way less than what they had previously seen.

Overall, media companies may not be so hard and fast about the future. "I don't think we're going to try and discipline the world to say that every platform has to be an ad-supported platform,” Carey said.

CBS -- long a gauge of where the TV advertising temperature resides -- now claims that under 50% of its revenues for its most recent third quarter period came from advertising sales.

This isn’t to say that big media companies are giving up the advertising-revenue dream, not when there is money to be made in getting all marketers and platforms to pay for viewership of shows through seven, 14, 30 days or whatever.

While many analysts continue to be nervous about viewership of original airings of shows, media companies know viewers still look for something to watch – and recognize that they’ll need to pay, either through a direct fee (daily, monthly, or otherwise), by giving up some of their viewing time (to advertising messaging) or by a combination of the two.

Traditional TV media companies look to play on multiple revenue battlegrounds in the coming years – including perhaps some we have yet to discover.

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