Commentary

The Next Cord-Cutters? The Networks

A billion years ago, Lenny Bruce said: “Marijuana will be legal someday, because the many law students who now smoke pot will one day be congressmen and they will legalize it to protect themselves.”

That popped into my head--in the most legal kind of way--as I have been hearing the financial results of the media mega-giants. They’ve all decided, all at once, that this whole digital revolution has a good chance of passing them by, or best case, letting them in but with new competition from Netflix and a few others. 

And so: They’d better alter their universe. Because they like their share of the pie.

Now, the networks and studios are all on-board with this digital thing, and brushing off the old scenarios, repainted for a different age. The other day, David Zaslav, CEO of Discovery Communications, noted Discovery could put all of its content on subscription video on demand platforms and do great.

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That musing was reminiscent of network chiefs a few years ago  floating--just sayin'--that they could run their networks as cable-only entities, which was a way to scare nettlesome broadcast affiliates hoping for a better deal on their contracts.

Everybody’s ramping up. The established networks are in that very odd position big companies get in when they realize, damn, we do have to change. It’s similar to when the big car makers had to acknowledge Japan. They did so by building cheaper, smaller, and unfortunately there for a while, worse cars.

Or to pick a horrible example, when JCPenney went all modern on us. It’s hard to learn new tricks.

Remember how a couple years ago, Fox, Disney and Comcast, the owners of Hulu, just wanted to jump off and sell the damn thing? Of course, they wanted to do it in that perfect broadcast monopoly kind of way: The new owner probably would not have been able to show rebroadcasts of their networks’ or studios’ programs. Which meant the new owner of Hulu would, in essence, be buying the stationery.

Then Hulu realized selling was idiotic and hit upon the sweetest concept going: A pay service with advertising and some demonstration of incrementally better content. For these owners, all of which make millions of dollars from getting cable operator to pay retransmission costs, Hulu is taking the dual-revenue stream to a new medium.

But here, consumers--that’s you--are playing the part of the cable networks. .

On 21st Century Fox’s earnings call yesterday, the Murdoch Boys made it clear they’re not in the buying mode, if for example, Disney and Comcast would like to part with Hulu now. According to Benjamin Mogil, an analyst at Stifel Nicolaus, as quoted on Investors.com, "the two reiterated that the company is in more of a build vs. buy mode, basically ruling out any material M&A, seeing few gaping holes in the asset collection.”  

Mogil continued: “While we believe that the company would be very interested in consolidating Hulu, such a move from the other partners seems unlikely, given the traction the service is having and the fear of not having equity in a viable OTT or subscription video-on-demand platform."  

And yes, so that’s what’s needed. Another Hulu, or two or three. The big aching problem online advertisers have is a lack of “premium” content to surround themselves with, and the growing bigger problem the networks have is losing their viewers to online services where people aren’t that keen on commercials. 

The answer is an almost-commercial free service that has premium content--like Hulu.  It’s ABC, NBC, CBS and Fox online content centers, with weirder series, some naughty language and subject matter protected from the FCC and the family values coalitions. Commercial content can’t just wither away. There are too many advertisers that need it. The networks need to be the cord cutters.


pj@mediapost.com
3 comments about "The Next Cord-Cutters? The Networks".
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  1. Leonard Zachary from T___n__, August 6, 2015 at 1:43 p.m.

    Major Broadcast Networks are not Dinosaurs but Innovators. True or False?

  2. Pat Dunbar from DiMAS Group, August 6, 2015 at 2:44 p.m.

    And in this scenario who pays for this premium content? Good content does not get self created. If anything all of the new channels have proved that consumers follow good content.

  3. pj bednarski from MediaPost.com, August 6, 2015 at 3:02 p.m.

    Pat, it's paid for by advertising and subscriptions, like it is on Hulu and on cable networks. I think Hulu has the right idea, now. --
    PJ

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