Tuesday, May 23, 2023

Cord Cutter Casualty: Cable TV News

During the first quarter of 2023, another 2.3 million customers (or 7 percent of the total) cut the cord to traditional cable — the fastest cancel-my-subscription pace ever recorded, according to MoffettNathanson, another research firm. The Washington Post reports the company estimates the number of homes receiving TV via cable is now about the same as it was in 1992, when the industry was still on the rise.

“Cable news is dying,” wrote Alan Wolk, a veteran advertising executive and media consultant, in a recent newsletter about the TV industry. “Not because it’s become irrelevant, but because the medium it lives on, cable TV, is dying.” He predicts that cable could, “for all intents and purposes, disappear” within a decade.

The advent of coaxial copper connections turned TV news from a once-or-twice a day ritual to something more like a lifestyle for millions of people drawn by the urgency of breaking stories and political commentary on a 24-hour cycle.

The leading cable networks remain enormously profitable, largely because of the economic dynamics of the larger cable industry. The financial foundation of cable news isn’t advertising but the license fees that cable-system operators pay for the right to carry them. Regardless of whether a cable subscriber watches Fox, CNN or MSNBC, their monthly cable payments help fund those companies.

Last year, the licensing fees collected by the six biggest cable news networks (Fox, CNN, MSNBC, CNBC, Fox Business and HLN) amounted to just over $4 billion, according to S&P. Advertisers added another $2.6 billion.

But the day could soon come when an exodus of cable subscribers leaves cable operators unable to afford the hefty license fees that those news programmers now command.

The major cable news networks have all joined the push to distribute programming via a welter of digital technologies — streaming apps, YouTube channels, podcasts, social media platforms — to meet the cord-cutters where they are. Yet so far, no news app comes close to matching cable in popularity and profitability.

Fox Corporation’s chief financial officer has suggested that its cable news channel could rapidly move all its programming onto Fox Nation, its subscription streaming platform, if it chose to. But thus far, a Washington Post calculation suggests that at $6 a month, Fox Nation’s subscribers (said to be 1.5 million strong two years ago) generate far less than 10 percent of the $3 billion Fox News collected from the cable industry last year.

CNN’s foray into streaming, meanwhile, was a well-publicized debacle. The network’s new owner, Warner Bros. Discovery, abruptly shuttered CNN Plus barely a month after the platform’s launch last year, having determined the projected investment wouldn’t pay off for many years.

Wolk, the TV-industry analyst, said news will have a particular problem in crossing the bridge from cable to streaming: The median cable-news viewer is in their 60s, a cohort resistant to taking up new technology.

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