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Tuesday, January 3, 2023

'23 Could Be Even Tougher For Traditional TV


2022 was one of the hardest years ever for traditional television companies — and it’s only expected to get worse as the ad market continues to slow and cord-cutting accelerates.

Why it matters: The transition to streaming has wreaked havoc on the business models of major media firms, driving a new wave of consolidation and putting smaller channels' survival at risk.

State of play: Paramount, Warner Bros. Discovery and NBCUniversal are all expected to sell or combine with other media entities in the next few years, in order to give their businesses the scale needed to possibly compete with tech firms like Amazon, Netflix and Google.Smaller TV companies are also scrambling to adjust. Lionsgate is looking to spin off Starz. Paramount is beginning to bundle Showtime with its primary streaming service. AMC Networks is laying off 20% of its staff.




Details: Most challenges plaguing TV giants today stem from the false assumption that streaming would be able to easily make up for linear TV losses.Paramount, Warner Bros. Discovery, Disney and Comcast don't expect their standalone streaming offerings to break even until 2024 or 2025 at least.
In the interim, not only is cord-cutting accelerating faster than expected, but so are drops in linear TV viewing broadly, including broadcast.

Digital "skinny bundles," like Sling TV or Hulu with Live TV, are not growing enough to make up for the declines regular cable packages.

Today, roughly two-thirds of U.S. households pay for a cable, satellite or fiber TV subscription, down from 79% in 2017 and 85% in 2007.


Zoom in: Media giants are having a particularly tough time convincing Wall Street that their streaming bets will eventually pay off.

The big picture: Today, most media giants are left in limbo, trying desperately to reap what's left of their lucrative linear television businesses while simultaneously investing in their expensive new streaming services.Nearly every streamer has introduced an ad-supported streaming tier, in an effort to lure more subscribers as competition heats up.

Some companies, like Warner Bros. Discovery, are beginning to license more of their programs to other TV distributors, after initially hoarding their own content to boost their own standalone services.

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