TV Stations next to be disintermediated?

November 28, 2005

On The Long Tail, Chris Anderson has some numbers on this year’s poor stock performance on the part of the 12 public TV station owning companies.

Terry Heaton says “Broadcasting is an industry in deep trouble, and it will take innovation and integrity to save it from a real disaster.” He then shows the stock charts over the past year for the 12 publicly listed companies that own TV stations. While the number of lines going south is striking, it’s a bit hard to see them in context that way. So I’ve re-run the numbers and expressed them below in percentage terms.

The upshot is that in 12 months when the Dow has risen 4%, these companies have fallen 16.8% — not a good sign.

But not terribly surprising, either.

TV stations (and to a greater extent, TV networks) are in pretty much the exact same position as record labels. They stand between the content producer and content consumer, controlling distribution.

Also much like the record labels, they’re ceasing to be the only game in town.

I know a number of people these days that only watch series TV on DVD — they wait until fall when last season’s DVD set is available, and then buy it and watch it at their leisure. Not to mention people who download torrents.

The real kicker though is where is it all going?

What value does a local TV station really have these days?

They can control content to community standards, in theory, but how many network stations in this day and age will refuse to run a popular series because they deem it inappropriate in their community?

They can provide local news, but the quality of TV news has been on the decline for ages.

They can provide local ad inserts, but the cable and satellite companies are already selling advertising to local companies to run on basic cable channels.

We constantly hear numbers that indicate that 70% – 90% of households now have cable or satellite.

What is the “value add” of (for example) a local NBC affiliate over and above the cable and satellite providers carrying several time zones of NBC programming direct from the network, selling local insertion ads, and perhaps buying local news from an independent producer?

In other words, what is the value add of treating network affiliates any different than say, FX or USA Network?

Pretty much nothing.

As the old paradigm of “Must See TV” dies, and getting in front of the television at 7pm on a Thursday to watch your favorite sitcom gets replaced with DVR timeshifting, VOD, PPV and downloadable programs, the same thing can begin to happen to the networks themselves.

If we’re not dependent on the networks to decide what content to air at a specific time, what’s their value? Why not just let us buy the content we want to watch direct from the producers, and we’ll split the middleman’s take with the people actually building the content.

That’s pretty much the way it’s got to shake out, in the end.

If you’re in a business where you make money by standing between a content producer and the consumer, you’d better find a new paradigm for making money.

I’d hurry.

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