Because we’re human, we lie to ourselves. Immerse the human animal in deep, deep trouble, though, and we may experience a divine moment of truth, realize who we really are, and change our ways.
Such a moment of truth has been granted to the television business by the looming digital-broadcast deadline of February 17, 2009, by the growth of program downloading, by DVRs, by the shift of ad dollars from TV to the Internet and by a few other elements of stormy weather.
Some results:
- Programming executives always used to claim that what they cared most about was the advertiser.
They probably really believed it, though their customers had their doubts. Now they are frank, at recent industry conferences, at saying they are doing something like “migrating towards being content companies.” In other words, they really care mostly about making and selling shows, only incidentally (if necessary) about pulling in audiences for spots.
Surprise—they’d rather schmooze with the talent than with the soap company guys!
If they can sell the show through iTunes or their own website, then carve out a DVD window, think how many ad salespeople they can lay off. The art of schedule-making is dead, too: only total dolts and old people stay hooked to the tube from one show to the next these days. And who needs affiliate relations guys, either, when you’re screwing the affiliates to sell downloads? Programmers have been liberated to be who they really always were anyway.
- Media company owners and managers used to believe they were important.
Politicians and bankers wooed them, they bought and sold stations, built conglomerates and then got to lay off lots of employees. When the dot-com bubble burst, they celebrated—at least they still had jobs. But the ad sales of Yahoo!, MSN, even AOL and especially a little startup called Google kept rising, while big media companies’ share prices have now slowly decayed for a decade. A reality check: Google had Q4, 2005 revenues of $1.919 billion. This is more than CBS, ABC, Fox Broadcasting or NBC.
TV company managers now know they are in a rust-belt industry. They woo politicians, hoping for regulatory crumbs, but the best they can hope for are spot buys in election years...but only for stations in competitive districts. They break up their companies, hoping for a share-price boost that doesn’t materialize. They pay billions in ransom to Steve Jobs, hoping he will bring magic to their kingdom. They barely escape a bungled breakup attempt, console themselves with monstrous salaries and new office towers, and yet still can’t make money for their shareholders.
The truth is now generally accepted: Big Media has grown so big that it cannot grow much more. The causes of such low growth are multifarious. Corporate survivors and backstabbers (often the same guys) are nurtured, rather than the next Rupert Murdochs. India and China want to nurture their own media, not ours. And then there’s the download problem, DVRs and the rise of gaming. Few truly intelligent businesspeople will gravitate to Big Media (though many lovers of programming will—see above); rather, they’ll go start a business elsewhere that monetizes eyeballs Big Media has somehow lost the ability to monetize, then probably cash out by selling to Big Media.
- Engineers used to know they were unimportant.
When one station buys another, an engineer becomes redundant. When one station group buys another, an engineering staff becomes redundant. Even at the heights of Big Media engineering departments, we all know that “let’s just do it as cheaply as we can” has been, shall we say, a significant trend. And these are all demoralizing trends.
But as a business becomes a rust belt, eventually no more engineers are redundantable (though that word probably is). And eventually some creative engineers figure out how to build something cool out of rust. This happened in steel, and lots of people made fortunes in scrap-metal mills. It happened in that big, unprofitable ball of copper known as the telephone industry, and we got the Internet.
Engineers have already figured out that they are the guys bringing HD to the rickety old video factory, and that HD is important. The most obviously important people in the TV business—the advertisers—still have not figured this out: they provide almost all their spots in SD. Well, I’ve spent a little time lately watching sports in HD in a fine drinking establishment. The drop-off in attention during SD segments of any kind, spots included, looks significant to me. And it seems self-evident.
And engineers are not only important to making HD look the way it should. Some of them might figure out other stuff that digitized TV spectrum might be used for, alongside TV. Specialized consumer devices that deepen consumers’ attachments to their favorite station or network. Googles and iPods and MySpaces for TV, and other stuff that people smarter than me think of, that I can’t, that actually makes a lot of money.
Content and container used to be joined, in TV. Why should they be joined, after all? Not too many dairies make their own milk cartons. Yes, broadcasters probably need to own their own facilities and transmitters, lest the FCC deem them unworthy of a license. But programmers have (properly) lost their allegiance to particular forms of distribution, and so particular forms of distribution may be set free to evolve new forms of programming. I will wager that some smart station or cable-system owners are already figuring this out. Maybe an owner of stations dropped by the WB/UPN merger. Maybe an entrepreneurial mini-station group or cable op in teeny little markets. Because they know they’re living in a rust belt, and all the corporate survivors have left for likelier riches someplace else. So now’s the time to start a scrap mill. They just need to do some serious R&D—like Nucor Steel did in the 1980s—to figure out how to build one. It will be a very strange change for television to become a technology industry again, after many long years as an entertainment business with as few techies as possible working behind the curtain. But let’s be grateful for the gift of truth that our industry’s hard times have brought us. In most for-profit industries on earth, entrepreneurial techies rule. This will never happen in the entertainment industry, but a shaken-up TV industry may allow for a next generation of leaders who seem more like those ad wizards over at Google than the guys with the good suits and pinkie rings who are running the place now.
Neal Weinstock is editor-in-chief of Weinstock Media Analysis and can be reached through www.weinstockmedia.com.
