First it was the newspaper that started to fail across the country; now it seems that free broadcast of TV may soon end as well. It seems that the old business model for ABC, NBC, CBS, and Fox of paying for their programing via commercials may not be enough to keep these stations alive much longer. Now these stations are asking that cable TV start to pay to view their content. Some are even saying that TV stations could stop broadcasting their signals for free and instead become paid content for cable and satellite subscribers.
A recent article states:
“Good programing is expensive,” Rupert Murdoch, whose News Corp. owns Fox, told a shareholder meeting this fall. “It can no longer be supported solely by advertising revenues.”
Fox is pursuing its strategy in public, warning that its broadcasts — including college football bowl games — could go dark Friday for subscribers of Time Warner Cable, unless the pay-TV operator gives Fox higher fees. For its part, Time Warner Cable is asking customers whether it should “roll over” or “get tough” in negotiations.
The future of free TV also could be altered as the biggest pay-TV provider, Comcast Corp., prepares to take control of NBC. Comcast has not signaled plans to end NBC’s free broadcasts. But Jeff Zucker, who runs NBC and its sister cable channels such as CNBC and Bravo, told investors this month that “the cable model is just superior to the broadcast model.”
The traditional broadcast model works like this: CBS, NBC, ABC and Fox distribute shows through a network of local stations. The networks own a few stations in big markets, but most are “affiliates,” owned by separate companies.
And there is this:
A small chunk of the ad revenue is being recouped online, where the networks sell episodes for a few dollars each or run ads alongside shows on sites such as Hulu. Media economist Jack Myers projects online video advertising will grow into a $2 billion business by 2012, from just $350 million to $400 million in 2009.
But that is not significant enough to make up for the lost ad revenue on the airwaves. Advertisers spent $34 billion on broadcast commercials in 2008, down by $2.4 billion from two years earlier, according to the Television Bureau of Advertising.
There he is once again. Old Rupert rears his ugly head once again crying he isn’t making enough money on his investment. I hope that the cable companies hold their ground. Let the TV stations go belly up. There are pay channels that would be happy to pick up the programming that free TV leaves behind.
What do you think? Is it time for broadcast TV to go the way of the dodo? Or is it time for Rupert Murdoch to go the way of the dodo?