Pay TV subscribers were down nearly 1 million in the third quarter of 2020. Yes, this is better than the decline of 1.77 million in the prior year period, and 1.46 million in second quarter of this year. But still, none of this is good.
And, as promised, here’s the really bad news:
Fourth-quarter season-to-date average per minute commercial rating is now down 18% for all national TV -- broadcast TV networks sinking 19% and cable adult-driven entertainment networks are off 18%. Kids TV networks are worse, continuing their 20% plus-long declines -- sinking 28%.
I know what you are thinking: When the pandemic ends, things will be normal. Define normal.
Legacy TV networks companies are throwing everything against the TV streaming wall, to help stem ongoing losses -- as quickly as possible.
Walt Disney has effectively reorganized its company -- all in for streaming -- including its current streaming brands Disney+, Hulu, and ESPN+. And that has meant layoffs, including at ESPN.
Expect more transitions like this coming from other large legacy media companies. Now the bottom line work starts: Where is it going to hurt? I’m not talking about staffing issues necessarily.
Wonder about all the business partners of legacy media companies: TV affiliate stations, pay TV providers (traditional and virtual), movie-theater chains, local and national TV advertisers. Expect lots more discussions — and maybe some yelling, as well. Also looks for business unit sales and/or spinoffs, or outright closures. (Did you just murmur Quibi under your breath?)
This year’s delayed and ultimately lower upfront advertising volume should tell you something -- even discounting all that the pandemic has wrought.
Bernstein Research’s Todd Juenger writes: “Our view remains that linear TV advertising will reset meaningfully below where it had been. TV advertising budgets, having finally been disrupted, we expect will not be restored to prior levels (ever-declining audiences don't help).”
Then, what is the exact value remains for streaming when all this shakes out?
What if not all, or most, of the intended $20 billion in national TV upfront spend (or the $70 billion overall TV advertising spend) doesn’t head to new streaming platforms started by traditional media companies?
Pressure from TV consumers is they want lighter — or no — advertising loads on streaming platforms, having little issue in directly paying some monthly subscription fees.
Long-term brand advertisers can now look forward an even harder effort in the new scramble for engaged TV viewers. That’s only one value consideration.