ZEITGUIDE TO THE FUTURE OF NETWORK TV
With major networks holding their upfronts last week, this is a perfect time to evaluate the state of the television business.
First, a quick recap of the major headlines from a week of networks showing-off their upcoming shows, super-star talent and latest ad-product innovations to advertisers.
—What’s On?: Foremost at each presentation was each network’s roster of shows and on-air talent. At Fox, the emphasis was on sports offerings. CBS made an effort to show a more inclusive slate, with the first three new series led by African-American stars. NBC picked up Fox’s Emmy-winning “Brooklyn Nine-Nine” and Fox is bringing back ABC’s “Last Man Standing,” just some of the examples of networks listening to fan sentiment to rescue cancelled shows.
—Shorter Ad Loads: NBC, Fox and Turner have all committed to showing fewer ads. Fox will expand the use of JAZ pods, made up of just two 30-second national commercials per break. NBC has its Prime Pod, 60 seconds in the first or last break of a show committed to two advertisers likely to have a strong connection with viewers. Networks are touting lower frequency to make ads more impactful and memorable. More crucially, it’s an effort to keep viewers from tuning out.
—Smarter Ads: NBC advertising head Linda Yaccarino poked fun at the bot and brand safety problems on platforms like YouTube, while highlighting her own network’s efforts at making ads more relevant and effective through AI and improved cross-platform viewing metrics. Many networks spoke to their ability to reach more targeted audiences across a range of viewing platforms.
The elephant in the room, and what might have the most profound impact on the industry’s future, is the ongoing merger mania.
—The first big merger news, expected by June 12th, will be a decision on whether a pending AT&T-Time Warner merger violates antitrust law.
—Should the AT&T-Time Warner marriage be allowed to proceed, Comcast (which owns NBC) is expected to make an all-cash offer to outbid Disney for 21st Century Fox’s film and television assets.
—There are also ongoing merger talks between CBS and Viacom. CBS’s Les Moonves received a raucous ovation at upfronts on the heels of suing Shari Redstone, whose family has control over CBS’s voting shares, to stop these merger efforts. That effort was struck down by a Delaware court on Thursday, keeping that merger door open.
The impetus for all this M&A activity comes from the rise of the digital behemoths. Despite user privacy and brand safety concerns, Google-owned YouTube, as well as Facebook, continue to grow their ad spending. Amazon Prime surpassed the 100 million subscribers mark this spring. Netflix now has more than 125 million subscribers, a yearly content bill of over $8 billion and a higher market cap than either Fox, Time Warner or Comcast.
Meanwhile, TV ratings have continued to slump and the audience for network TV is aging. For advertisers, the digital first outlets provide valuable reach to younger audiences and more advanced methods for targeting specific segments of consumers. After peaking in 2016, national TV ad sales fell 2.2 percent last year, per IPG Mediabrands, and are expected to continue to decline at least 2 percent each year through 2022.
In such a challenging and dynamic time for the networks, can mergers give legacy companies enough scale to keep the digital giants at bay? Will running fewer ads help keep audiences tuned in? Can networks’ own digital platforms deliver the seamless viewing experiences audiences crave, as well as the targeting and measurement abilities that advertisers demand?
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