It must have been a kind of glum day for NBCUniversal CEO Steve Burke, who told investors during an earnings call that Comcast is trimming its roster of cable networks it owns to concentrate on more popular ones.
Meanwhile, over at Facebook, more sadness: It is doing so well, it doesn’t know how to keep doing it. CFO David Wehner was lamenting that on Wednesday, though to be truthful he didn’t seem so sad.
The problem is Facebook has run out of places to put all the ads it has, which might inhibit its revenue growth.
That problem will likely lead it to improve what it does with video advertising for which it can charge more, and where it can shove more ads. Since social networks, especially Facebook, are where people are increasingly going for entertainment and news, Facebook’s good fortune makes publishers nervous.
At first, the market spiked at Facebook’s news. But then, as Fortune reported, things calmed down today, So far, it’s up only a little more than 2%
“Despite the excitement surrounding Facebook’s earnings, there’s is still a nagging sense of unease about the company’s ability to maintain such growth in the long run,” Fortune.com wrote.
No news is good news, and apparently, good news is never that good.
But truly, combine Comcast’s news with Facebook’s and you’ve got two companies passing themselves on the escalators. Burke says Comcast will pull back on its cable networks, no doubt because it costs a lot to program outlets that very few people watch.
And as you may have heard, consumers are sick of all those "choices" they are paying for and not watching.
Curiously, Comcast and every other large cable network operator decided about two decades ago that adding cable networks for the most insignificant niche was a way to go. It was a land grab, really. Cable networks rushed to fill newly created space cable operators had, afraid that if they didn’t somebody else would.
Maybe that made sense to somebody, but it also guaranteed there would always be a glut of ad positions available. And in time -- like the time we’re living in now -- consumers paying $200 a month for hundreds of channels and still watching the same 16 they ever did got tired of that system. With the Internet, they could leave, and now some of them are. And now cable operators are reacting.
The cable and satellite operators really could begin adopting the marketing slogan, “Now, with even fewer channels!” Which is what Burke was saying even as Comcast, happily, was reporting fewer defections in its second quarter than previously.
“There’s just too many channels and people are spending too much programming channels that are not fully distributed” across American pay-TV homes,” Burke said, according to The Wall Street Journal.
Comcast already jettisoned G4 (that was in February 2014) and Style (which became Esquire) in 2015, and more are coming.
Don't you miss G4?
Burke also predicted: “You’ll see more of that with us and others as the discussions with [pay-TV providers] get more and more contentious,” Instead, he said Comcast would put more money into USA, Bravo, SyFy and NBC, networks it owns that people actually watch. Good plan!
At Facebook, the problem is just too much. By and large, analysts really, really like this kind of problem. A lot of bulls are riding this “rocket-ship trajectory” as The New York Times put it. Its second quarter sales of $6.44 billion were up 59% over a year ago. Its profit virtually tripled, to 2.06 billion. It has 1.7 billion users, up 15% from a year ago.
And as mentioned, it just doesn’t know where it can put more advertising. Putting it into video and Facebook Live seem to be pretty good guesses. But Facebook probably won’t start a cable network.