More TV Execs Not Getting It

The Financial Times has covered both the Jeff Zucker firing from NBC (totally expected) and the recent Goldman Sachs TV conference. In both cases, you have undeniable proof that TV execs just don’t get it. They believe that their content is so superior, it will put them in the driver’s seat, forever. When, the real risk they run is folks like Verizon, or T-Mobile, or Nokia, seeking to compete by offering their own content. Which seems inevitable.

The Goldman Sachs conference was covered here. CBS’s Les Moonves called today a “new Golden Age.”

Apple and Amazon are renting television shows, Netflix is streaming films, Google is launching a TV product, and millions of people are tuning into the iPad. Suddenly, it seems, technology companies are charting a new course for the media business.

Yet the captains of big television networks are expressing confidence that they still have the upper hand.

At the Goldman Sachs Communacopia conference in New York this week, executives from CBS, NBC Universal, News Corp, Time Warner, Viacom and Walt Disney fired shots across the bows of the technology companies seeking inroads into their territory.

In an unusual display of solidarity among competitors, the unanimous message was that they would be judicious about making their programming available online, and seek to extract full value from their TV shows and films. Content, it seems, is confident again.

“I feel better today than I did probably at any point in the past about the NBC broadcast network’s ability to survive,” said NBCU chief executive Jeff Zucker.

“This is really the golden age,” said CBS chief executive Les Moonves. “All the networks and cable have extraordinary shows, and the numbers are pretty extraordinary.”

Such confidence might seem out of place for an industry that is facing incursions from online video upstarts and saw US cable and satellite subscriber numbers fall in the second quarter of the year for the first time on record.

But the moguls said there was little evidence of widespread “cord-cutting”, the shorthand for consumers choosing to live without cable or satellite services. Bob Iger, chief executive of Disney, said he remained “bullish” on the television channel business “even in the face of aggregators like Apple, Netflix, Hulu, whoever”.

Meanwhile, networks are looking to play the digital platforms off against each other, in part by offering different content to different distributors in different time “windows”. While each of the networks has made salvos online, they seem in no rush to make all their content available on any one platform.

“I don’t think an early entry is necessarily the greatest thing,” said Mr Moonves.

In their measured approach, the networks are seeking to avoid mistakes made by the record labels, which 10 years ago allowed Apple disproportionate influence over music pricing through iTunes.

“Our content is a scarce resource and we need to manage it intelligently,” said Chase Carey, chief operating officer of News Corp, which owns the Fox network.

All the big studios are dabbling in digital. News Corp and ABC have partnered with Apple to offer 99 cent rentals of TV shows, while CBS and NBCU have withheld their content for the time being. But even these positions are provisional. Mr Moonves said CBS would “accept their phone call” if Apple asked again next year, while Mr Carey called Fox’s Apple deal “a short-term test”.

Mr Moonves, who had kept CBS content off Hulu, an advertising-supported site financed by and populated with content from NBC, Fox and Disney’s ABC network, also indicated that its new subscription service, Hulu Plus, “makes a lot more sense to us”.

With no dominant online platform having emerged, content for now is fragmented online, and may remain so for three to five years, executives estimated.

“The digital space isn’t going to get all shaken out and defined by Christmas,” Mr Carey noted.

In the meantime, Disney’s Mr Iger said that no one digital platform seems likely to amass enough power to dictate terms to content owners. “It’s a much more complicated world,” said Mr Zucker.

Scatter pricing fees, last minute spot rates, are up 15-17% from last year. Retransmission/carriage fees (ala cable) are also increasing, reports the Financial Times. But the execs at the conference are dead wrong. Verizon CEO Ivan Seidenberg says cutting the cord is real. He notes that being a dumb pipe is a losing proposition. Cable fees are expensive, even HBO long ago realized that to keep their market share (they are available in nearly 100% of US households, but only 30% of US households pay for the service), the channel had to have compelling content found only on HBO. Me-too copying “television being the sincerest form of imitation” ala Fred Allen, would not cut it with consumers even in the go-go 1990’s and early 2000’s. Consumers can save considerable amounts of money, by canceling cable or satellite. Only Pro and College football likely keeps the cable or satellite cord from being cut. Audiences for such things as Project Runway, or even Jersey Shore, are niche by definition. Its not such compelling, serialized content that people will pay to consume it. Nothing like say, the power of Dickens stories that had longshoremen shouting at ships tying up at dock for the latest news of his characters. Yes spot ads are up, slightly, from last year’s debacle. Organic, sustainable growth that is not.

Being a dumb pipe, like say Amazon or Apple are now, is fine if your core expertise and revenue lie elsewhere. For Amazon, it is being the number one retailer on the web, building on both its recommendation system and its “stores” (basically providing e-Bay like service for mini-sellers) to offer the most convenient, and “safe” web retailing service. For Apple, most of their revenues still come from hardware, mostly the Iphone and Ipods, then laptop computers. Itunes is a growing revenue stream, but relatively small compared to other parts of Apple’s revenues. For both of these companies, being a winning aggregator is fine, they are not lean and hungry enough to venture into content creation, though their considerable cash reserves allow them to do so if they wish.

It is other companies, sitting on a lot of cash or struggling to break out of “dump pipe” status, that are threats to TV studios and networks. Netflix has already started exploring creating its own content, as HBO did years ago. Verizon could do the same, so could T-Mobile, or AT&T. All three mobile networks offer mere service (AT&T’s monopoly on the Iphone is likely to be broken soon) that is at its core, a commodity. Having the exclusive content, available only on their network, is a way to make people keep re-subscribing, and tolerate higher fees.

Microsoft is hungry too, failing to find much success out of its core Windows and Office monopolies. Making Bing into more than just search, offering exclusive, subscriber only content, is one way for them to grab market share away from Google. Which in turn has struggled to find profitability from YouTube. YouTube under Google has experimented with the Tribeca Film Festival on pay-per view movies of films in the festival. Offering original serialized content is one way to make the huge bet Google has invested in YouTube pay off. Since user-supplied video of guys crashing into a wall on skateboards has not been very profitable. As mentioned in the prior post, Nokia is lean and hungry. The company will never beat Apple’s lead in apps, nor even approach Google’s Android operating system and its own app store. Original Content available only on Nokia’s phones and partner service providers is one way to win.

And really, what’s the barrier to creating content? Cash. Nokia, Verizon, T-Mobile, Google, Microsoft, they all have a lot of it, still. HBO was able to commission its own content, and its just a smallish cable operation (admittedly part of Time-Warner, but that can hurt as much as help given the Byzantine politics inside Time-Warner). Soundstages in LA, and globally, are for rent. So too, casting directors, writers, agents, producers, cinematographers, skilled crew members, actors, and so on. The infrastructure to make serialized, TV-style entertainment is global. Anyone with the cash can make it, pretty much anywhere.

The comments from fired NBC head Jeff Zucker are pretty telling.

Mr Zucker began his career at NBC 25 years ago, quickly rising from researcher to produce the Today Show at the age of 26. As chief executive, however, he has faced criticism for his management of NBC’s entertainment properties, notably after a failed attempt to shake up its core broadcast network’s prime-time schedule.

He was mocked, sometimes by comedians on his own payroll, for the reshuffling of Jay Leno and Conan O’Brien, and the jury is still out on the scripted programming that now fills the evening schedule.

By contrast, cable properties such as USA Network and Bravo grew strongly and Mr Immelt sang Mr Zucker’s praises. “He has always stepped up when the company needed him. He never blinked when it came to tough decisions.”

Mr Zucker said: “I think I was creative and innovative. I think I took a lot of risk, I put diversity on the agenda and I created a culture of co-operation and collaboration I’m incredibly proud of. I do wish this had been a simpler time.”

He added: “I turned this into a hell of a cable network company and expanded internationally and digitally and dealt with a cost stucture in an economically challenging time.”

The man started at Ground Zero for female-oriented PC: the Today Show. He brought the same, female-oriented perspective (Average White guys suck!) to his NBC job, and drove the network into last place. His legacy is more, female-oriented, Average White Guys suck! content including “Undercovers” and “Outsourced” (i.e. isn’t it funny Americans lost their jobs to Indians in India!). While the latter has held on (in the premiere) to most of the Office’s lead in, so too did 30 Rock and Parks and Recreation, comedies in the mode of NBC’s Thursday night line-up (i.e. not very funny, or popular). NBC still dominates the night, but gets fractions of what it got in the late 1990’s with Friends and Seinfeld.

Zucker’s legacy is lack of any compelling content. NBC has nothing really, that tens of millions of people, or more, will tune in week after week just to see. The characters and situations are as boring a self-consciously “hip” Malibu lecture on the need to save the Whales or polar bears delivered from a beach side, $10 million mansion. Nothing Zucker created really stands out, as compelling, can’t-miss TV.

Leaving his network (and the rest as well) hideously vulnerable to whoever can provide a sports and entertainment package that beats the current offerings, on price, and emotional content. Very little on either cable or broadcast network is so compelling people even care to see it live or on tape.

Someday very soon, a “dumb pipe” will transform itself to a place for exclusive content, seen only on that pipe. It won’t be broadcast TV or cable, neither have a clue. And the change will wipe them out just as the lack of compelling content wiped out the music business.

About whiskeysplace

Conservative blogger focusing on culture, business, technology, and how they intersect.
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9 Responses to More TV Execs Not Getting It

  1. Anonymous says:

    so true. I keep my cable for the highspeed internet and sports. The closed captioning because I'm deaf is a side benefit, but with most games (Ps3, PsP, Xbox, wii) now having standard captions I really don't watch much tv. A movie I like if it happens to be on. Perhaps one of the male skewing shows (Supernatural, Chuck, Smallville) but other than that I don't really care for tv. In fact, I already prefer Anime from Japan (Highschool of the Dead, Bleach, Naruto) to 99.9% of all American TV. Hell, I'm rewatching Airwolf and get more enjoyment from that than modern shows. At least they tend to be more respectful of the male point of view and portray men that men truly would like to be. When content with an accompanying sports package goes live with an above average average service, I will drop cable tv/ phone service and never look back.Corey

  2. programmer says:

    Right now cable seems to be the best source for high speed internet. DSL doesn't seem to be competitive nor does satellite internet service. Cell phone data services aren't fast enough either, IMHO.I, too, only subscribe to cable for high speed internet. I haven't watched TV in a long, long time.

  3. MarkyMark says:

    I cut the cord years ago. Years ago, I had a choice: either pay for cable, or spend the money renting a garage for my two motorcycles. I chose the garage. Now that more and more content (especially sports) is available online, why bother getting cable?Oh, and if you want to watch MTV's Jersey Shore, you can go to their website. As soon as the current episode finishes on the left coast, it's posted online. I've watched every JS episode on MTV's website. Savvy content providers will make their programming available online as well as on cable and satellite. Since video is getting better all the time on computers, this is a viable alternative to TV.

  4. Samual says:

    satellite tv internet will allow you to watch more than 1300 TV channels worldwide, wherever you are, only having a PC with Internet access. You don't need to buy any PCI card, computer device, satellite dish, nor pay for a subscription or monthly fees. You will be able to watch movies, series, sports, documentaries, music, cartoons, religious channels, live cameras from all over the world.

  5. Kinuachdrach says:

    I'm on the low tail of the distribution — recently purchased a big screen TV and Home Theater PC mainly used to watch streaming content from Netflixs over a barely adequate rural wireless internet connection. So I can't claim to be representative. But here's my 2 cents.First, even on barely adequate streaming internet, there is no way I ever want to go back to a regular screen, let alone a tiny phone-type screen. The world has moved on!Second, I would happily pay for (say) 10 cents per view programming delivered on-line via a Netflix-like service and charged monthly to my credit card. But mini-pay-per-view might not even be necessary. If the industry moved to click the link type programming, suddenly advertisers would have (for the first time) very accurate information on audience size & demographics at minimal cost. This could become the prime channel for advertising.The other great thing about mini-pay-per-view would be that it could expand the universe of content providers, as Whiskey points out. We could have a Netflix-type organization acting as the Amazon of video, distributing content from all over the world. I see a lot of potential in dubbed Russian TV programming, and even non-dubbed musical & ice-skating programs — available at very low cost.Bring on the future!

  6. I cut the cord months ago and haven't missed Cable TV (or my Phone bill) one bit. If you have good broadcast TV reception and fast internet it really is a no brainer. With only broadband it is a littler harder, but not a stretch. I'm more than happy with my $100 per month savings.

  7. justsmit says:

    Enjoy internet TV you foolish masses of mindless drones.I, the enlightened counterculture advocate, have already seen the cultural hegemony of youtube and the blogosphere that you conformist brainwashed sheeple have chosen to follow.When you flock to the internet en masse as it becomes co-opted by the mainstream corporate interests, I will be cherishing the true authenticity of street performers and transexual buskers.much the same way as when you fled to suburbia, I then took to the inner city with all its glorious blacks who have kept in touch with their spiritual/musical roots and basic human nature.and then when you came back to the inner city and bought up all of the lofts that corporate developers had refurbished, along with your evil gentrification, I grew tired of your conformist natures and chose to live among the trees within my adobe strawhouse powered by solar panels and wind turbines (I'm building an earthship with recycled grey & black water systems btw).and when you and yours greedily and predictibly gobbled down fast food and conventionally grown produce at your fluorescent-lighted hypermarkets, I seeked out the very human, very real, one-on-one contact with locally producing organic growers. It was tough, and I had to cut out a lot of vegetables during different seasons, but such is the way of the conscientious being.Such is life, but with the concerted effort of individuals and organizations like Noam Chomsky and Democracy Now and Adbusters, and with feminists and organic advocates and civil rights activists (such as those wanting to see Mumia Abu Jamal freed from this unjust system) and LGBT advocates and other countercultural warriors, your time is drawing to an end!Until then, go in peace my friends. Love earth, love black people, and down with patriarchy.

  8. Samual says:

    Are you looking for how to watch live satellite Television channels on your PC? Are you tired of paying those monthly bills every month? Now this is possible with satellite television.

  9. MarkyMark says:

    Samual,The only problem with that is the app they sell doesn't work with Linux… :(MarkyMark

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