Commentary

TV Company Owners: Easy Money, R.I.P.

by Dave Morgan , Featured Contributor, Yesterday

TV companies have seen their future, and it looks a lot tougher than their past. The days of the predictable, super-profitable, mass-managed, dual revenue streams from both distribution and advertising are over.

The distribution business, whether carriage fees or retransmission fees, are “falling knife” businesses, heavily tied to subscription cable and satellite subscriptions that continue to drop as streaming and connected TV packages become increasingly available and attractive to consumers -- and, many times, are free.

Worse, TV companies’ advertising businesses, historically based on bulk, impression-dominated deals sold to large holding company agencies on a wholesale price/volume basis, face enormous headwinds with their falling audience and viewing numbers and intense competition from both massive, performance-focused digital platforms and sexy streaming services with younger, more attractive demographics and full, digital-like audience targeting and measurement.

So, is it over for TV companies? Absolutely not. Lots of TV will be viewed by lots of people -- many on linear -- for a long, long time.

However, TV companies’ future will rely increasingly on advertising, with profits driven by expertise in ad yield, not just ad load.

To drive predictable growing profits, TV companies will need to embrace these four shifts in their advertising business:

From quantity to quality. This is a cultural issue. TV companies were built on bulk numbers, but the future isn’t about bulk numbers. TV ads are incredibly effective. They are high quality. They perform very well. TV companies need to embrace positioning their ad businesses around quality, not quantity.

From volume-based ad pricing and packaging to precision and yield pricing. A rerun of a TV show on a cable network is lucky to get a $7 CPM. On Netflix, an ad in the same rerun gets north of a $30 CPM, and that’s before adding any real audience targeting.

TV companies are addicted to high CPMs for their popular live sports, live events and top shows -- and throw the rest of their inventory into the package at low CPMs to “dollar average down” the overall deal for agencies and clients.

Kill old-school packaging. The “packaging” culture of TV leads to underpricing both their best inventory and their less-differentiated spots. Buyers of the top stuff are having to take things that they don’t really want, paying way less than the value of what they don’t really want. It happens because of history and because it is easy.

But, as Brad Horowitz of a16z wrote, “The hard thing about hard things is that they are hard.” Building a yield-focused culture and yield-delivering systems won’t come easy, but they will drive growing profits.

From all owned-and-operated only to running a quality audience network. TV companies will increasingly sell inventory that is not on their own properties. Yes, they will become ad networks. With consolidation, it will be harder and harder for small and medium-sized TV companies to maintain the sales organizations, tech and leverage to drive the kinds of ad yields that they need to survive. Thus, one or more of the bigger companies will build networks partnering with their smaller brethren.

Kill garbage-driven audience extension sales. Building real audience networks should not be confused with some of the questionable “audience extension” streaming ad businesses run by many today, where a modern version of packaging is used. The company sells a portion of its actual inventory but then fills out the order with real-time-bidded inventory purchased off questionable demand-side platforms and supply-side platforms to, once again, “dollar average down” pricing. And much of the programmatic "audience extension” arbitrage is fraudulent or mislabeled impressions, which shouldn’t be too much of a surprise to anyone.

Invest in audience, data, software and science. This future isn’t easy. It will take investment -- lots of it, and ongoing. AI is making some of the tech more accessible and capable, which is good, but it is also raising the bar. The TV companies that embrace this future will find profits. Those that don’t, won’t.

What do you think?

4 comments about "TV Company Owners: Easy Money, R.I.P.".

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Ed Papazian from Media Dynamics Inc, January 29, 2026 at 3:31 p.m.
Dave, there's a lot there but I question some of your recommendations.

For example, you seem to be saying that traditional TV time sellers--the networks, mainly--should abandon their bundling of high and low rated shows and, I assume, the whole upfront concept. And then what? As most of their shows will be low rated how do they monetize the whole mass of content ---the few highs with the many lows--- for maximum value --namely ad revenue in relation to program costs. How many buyers will pay worthwhile CPMs for packages that consist only of low rated shows?

Another question concerns the "quality" of content aspect. Like it or not reruns are a must if program costs are to be held to a reasonable level and ad revenues are gained at a profit. That's nothing new--it's been true since TV began. Your cable example doesn't really make the point. A typical streaming CPM is somewhat below that of broadcast TV and way higher than cable and Netflix is not a typical example of streaming CPMs--it's on the high end while many cable CPMs are higher than that $7 figure you mentioned.

Which brings us to the question of solutions. There's no realistic expectation that linear TV, led by the broadcast TV networks plus some major cable channels--ESPN, Fox News, etc.--is going to radically alter the old age slanted demos of its content. And there are no signs of any attempt to do so--it's too late and would require a vast dip into red ink to even try. So how would "better" audience targeting help if so much of the audience is older adults and so little is younger adults. That's an imbalance that will appeal to few advertisers--- or their computers--unless your CPM pricing is very low--which is how they are selling their time now.

As I note in my upcoming book, "TV, Yesterday, Today and Tomorrow", traditional TV--broadcast TV---- handled the advent of cable very well but missed the boat when it came to streaming. Now it's got to find a way to make its two enterprises--a fading linear TV empire and struggling streaming ventures pay out. I fear that consolidation and many fewer players is the only hope. But, maybe I'm wrong. We shall see.
Reply

Dave Morgan from Simulmedia replied, January 29, 2026 at 4:32 p.m.

Ed, I do believe that the TV companies can change how they sell, and I do think that packaging is easy to do (and will be hard to break) but dramatically undervalues the "low value" spots. Digital companies can sell audience segments at much higher CPM's than content alone commands. TV companies could too.

Ed Papazian from Media Dynamics Inc, January 29, 2026 at 5:49 p.m.

Dave, while I am very sympathetic towards efforts to target better and improve the way TV ad time is sold, it's the practicality and the dollars and cents trade-offs that will eventually rule.

For years I have advocated improved ways to make--and sell--upfront TV time--but made zero headway as the system is entrenched and bureaucratically constipated. Change is feared by each silo as "the enemy"--which is why linear TV is declining.

Over and beyond that, there are far too many players but not enough viewing. Imagine what would have happened in 1970 if there were 15, not 3, broadcast TV networks competing for the average person'e 3.8 hours of daily viewing. And then there were many shows that attracted younger viewers. Very few of those 15 networks would have survived more than a few years.

The sad thing, is that CTV is becoming little more than an extension of linear where content, ad loads and time selling are concerned. Sure, there are exceptions--and, for a time, one can exploit some of the new benefits--providing the advertiser and his agency really digs in and deals directly with the sellers. How long will that situation last is the question in my mind.

Dave Morgan from Simulmedia replied, January 30, 2026 at 8:34 a.m.

Ed, CTV and streaming may only be a modest extension today for TV companies, but indepdent streamers and CTV platforms are becoming massive ad businesses. The TV ad business is no longer about the TV companies. Amazon, Google YouTube, Netflix, LG Ads, Roku etc are not directly accessing "TV budgets," not just winning from strategic reallocations of linear spend to permium digital video and streaming platforms. Linear TV has plenty of audience and there are plenty of tools, platforms and data that can "re-aggregate" their audienes in more efficient, more targetable packages that would dramatically improve thier ad revenue yield. But, time is running short. Not fully embracing this future will only accelerate falling profits and inability to meet debt service.