Commentary

TV's Value Should Be Assessed Amid Declining Numbers

by Wayne Friedman , Staff Writer, November 6, 2020

With all the promise of TV and streaming, we cannot forget the bad news and the really bad news.

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.

streaming, tv

2 comments about "TV's Value Should Be Assessed Amid Declining Numbers".

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Ed Papazian from Media Dynamics Inc, November 6, 2020 at 10:59 a.m.
Wayne, you raise some interesting questions. However, we must also expect a major hike in TV CPMs in the future for CTV and AVOD, in particular, as the GRP tonnage flows slowly but steadily from "linear TV" to new venues---but also, for "linear TV, itself. So, advertisers who want to make their case to the comsumer via "TV" commercials will have to decide whether they are willling to pay more than now---or simply reduce the ad support for their brands. I believe that we will see most of them, reluctantly, chosing to pay more.

Where will the money come from? As in the past---and unfortunately for other media--- the money will, most likely come from print media and from local---as opposed to national---ad dollars. Finally, it's not a given--as some keep saying---that the majority of consumers will not tolerat new ad-supported TV venues like AVOD. What they object to most are the heavily cluttered ad breaks and, so far, the new AVOD services as well as the CTV folks are heeding this by presenting much less clutter than "pay TV". While this will, no doubt change---long term---by that time most subscribers will have gotten used to tolerating ad breaks---if the increases in overall ad clutter are managed cleverly.
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Paula Lynn from Who Else Unlimited, November 7, 2020 at 9:03 a.m.

Millions of people lost their jobs and lost their income. Millions of people are on the verge of being evicted and lost their mortgage. What do you think one of the first things they can do to lower their monthly costs ? Throughout your article, there is no mention of demgraphics except they don't want ads. How embarrassed and how bad do people who have never had this problem in their life are and will tell you anything as an excuse to drop their service. TV advertising may have budgets, but millions of people more than since the great depression are food insecure do not have budgets.