We all watch; some rubbing their hands together in glee and back patting, as the newspaper industry flails around trying to keep its head above water. For the most part it seems as if they are doing a rather bad job of it as more and more established newspapers shutter their doors forever. They all might like to point at the big bad Internet and the current economic climate as the reasons for their slide into oblivion but the fact is that while the Internet might be the vehicle of change it only shows how flawed the business model of the industry is.
If this is indeed the case one has to wonder just what is in store for that other bastion of culture and greed of our society – The Television Industry. Like the newspaper industry television is an advertising reliant business where a 30 second spot on a hot primetime show; of which there are fewer every year, can cost an advertiser upwards of $700,000. However just as with newspapers that revenue stream is under severe attack. It might not be as bad as it is in the newspaper industry but if we follow it as an example it doesn’t bode well for the television networks.
Financially, the networks are on shaky ground, partly because they rely almost solely on advertising. CBS reported that for the fourth quarter of last year, as the recession deepened, operating income in its television segment declined 40 percent, even though it was by far the most-watched network. In the second week of February, CBS had 12 of the top 20 shows, according to Nielsen Media Research.
News Corporation, which owns Fox, reported operating income of $18 million in broadcast television, compared with $245 million a year ago. And Disney‘s broadcasting business had a 60 percent drop in operating income.
It has gotten to the point that unlike the stead climb of advertising rates the networks have actually started to have to reduce them by and average of 15 percent, about $122,000 for a regular prime-time spot. As a result we have been seeing a growing shift in the type of programming being offered. Now we get cheap to make reality shows, talk shows etc rather than expensive to produce shows like Lost and other big name shows. Chances are that today we probably would even see shows like it or CSI get off the drawing board especially consider that it cost about $10 million for the two part pilot episode of Lost.
As Michael Nathanson, an analyst at Sanford C. Bernstein Company, said in the New York Times post “That’s why the architecture needs to change”. The questions we have ask are – into what and do they have enough time?
[graphic courtesy of TV Blanket]