TV’s next

Young Broadcasting, once – but no longer – a forward-thinking TV company, just filed for bankruptcy under the crushing $13 $1-billion debt load. This follows the bankruptcy of cable company Charter and, of course, TV-station-owner Tribune company. And let’s not forget radio giant Clear Channel, with $19 billion in borrowing, tapping its last-resort debt and Sirius-XM (whose stock I own) nearing bankruptcy while even Muzak crosses the line.

We’ve been wringing hands over newspapers and magazines but TV and radio aren’t far behind. Broadcast is next.

It’s a failure of distribution as a business model. Distribution is a scarcity business: ‘I control the tower/press/wire and you don’t and that’s what makes my business.’ Not long ago, they said that owning these channels was tantamount to owning a mint. No more. The same was said of content. But it’s relationships (read: links) that create value today.

Young tried to build relationships, once upon a time. At WKRN in Nashville, Mike Sechrist did amazing work starting blogs, buildilng relationships with bloggers, training the community in the skills of the TV priesthood. But he left and all that disappeared. Been there, done that, I can imagine executives saying as they try to stuff the hole in the dike with borrowed dollars. Didn’t work.

The local TV and radio business, once a privilege to be part of, is next to fall. Timber.

  • Tom Davidson

    Quick CX, Jeff: Young’s debt is indeed crushing. But the $13 billion figure belongs to Tribune. Young’s debt is more along the lines of $1 billion (just shy of it, in fact). Still, given annual revenues of ballpark $150 million, the gerund “crushing” still applies …


    • Thanks! I wondered! Will correct it now.

      • Tom Davidson

        (The more-philosophical question: how old did we declare ourselves to be when I used the archaic term “CX” and you understood it? Here’s hoping I’m alive long enough to see some youth stare blankly when someone says “tweet.”)

  • BT

    It seems like the natural progression of the “[content] distribution as a business model” is to:

    1) initially provide a valuable distribution service
    2) build an industry so large that it seems to have created its own environment in which to thrive
    3) ignore the rapidly-evolving alternative distribution models
    4) lobby policy makers to alter the rules in an attempt to prop up your waining competitiveness/monopoly
    5) (optional) sue and/or tax any (ex)customers that are unwilling to pay you any longer
    6) make a half-baked attempt at using the new distribution channel without really letting go of the dream of reviving the decaying remnants of the cash-cow that once was
    7) drive the once powerful, profitable, and valuable business into the ground–simultaneously erasing shareholder value, incensing your once-loyal customers, and enacting legislation that will likely gum up the larger economic engine for decades
    8) finally die

    Is there anything we can do to speed the whole thing up or at least make it tougher for the dying to waste anyone’s resources but their own?

  • BT

    That should be an 8 ), not a smiley.

  • In my home town there are a number of radio stations with a second (HD) channel. Which you never hear about. Now, if one is going to start up a second channel because one now has the technology for it, wouldn’t one do some promotion for it? How about some programming of your new KGB Blue or 933 Blue?

    And try finding HD radios in this town, under that name. It’s not just broadcasters, but the industry as a whole who royally flubbed this situation. If you must introduce something new, at least have some idea what you’re going to use it for.

    Broadcast tv and radio will be around into the future. Not everybody wants to get everything over cable after all. As wifi spreads expect micro-broadcast to expand. Low power stations distributed through a wifi net, and picked up by low gain receivers. With the right connections you’ll be able to pick up a 20 watt small town high school station two time zones away. And likely on something powered entirely by the signal, much as the old crystal sets were.

    Somebody will come along who knows what they’re doing, and a mostly dead enterprise will be revived again. But don’t expect the old parties back, for they don’t even know how to go through the pockets for loose change.

  • No doubt. And the DVR/TiVo ain’t far behind.

  • What do you think is the “next big thing” in terms of mass entertainment?

  • I think you’re correct to some degree, Jeff. Cable companies have been the gatekeepers of content for a very long time now. Now Telcos are getting into the pay TV business (as well as satellite). What this means are more options for consumers.

    The biggest trend I see is that many TV networks and content owners, are avoiding the gatekeepers and doing directly to consumers. Why have a middle man? Why have a reseller? The Internet and digital entertainment is taking this content from gatekeepers and taking away their power. Now, consumers have more power.

    New gatekeepers, like Apple iTunes and NetFlix and Vudu are coming on board. And they’re changing everything.

  • Andrea Mariotti

    The next big thing is full control given to the consumer (that be us). Have a look at this

    It is about time that we the consumers gain control of what we want to watch and that we are no longer forced to buy bundles we do not care for (see Jeff’s WWGD..)

    Oh and no, I have no vested interest on Zillions, unfortunately ;-)

  • If we Netters keep destroying old business models before content creators (professional or citizen or what have you) figure out new ways to pay for their efforts, we’re all in deep trouble.

    Sure, consumer control is a wonderful thing. But if none of us pay for information, how reliable and deep will that information become, over time? Just because advertisers no longer need the media as ‘middleman,’ doesn’t mean we’ll want an e-mail box stuffed full of warm greetings from Q-tip and diaper sellers.

    Sometimes we don’t want a ‘relationship.’ We just want to buy stuff. Or know what’s going on, from someone paid well enough to dig it up and present it from a non-slanted perspective.

    No, not a curmudgeon. Just some contrarian thoughts about how wonderful this Brave New World of Googlism will be. Sometimes, wrenching change leaves good things behind.

    • Andy Freeman

      > But if none of us pay for information, how reliable and deep will that information become, over time?

      The assumption that the information is becoming less “reliable and deep” is false. The real change is that we’re discovering how unreliable and shallow media is/was. Since the perceived value is going down, so is what we’re willing to pay for it.

      While I understand that some folks would prefer to get the same money for the same old swill, the world doesn’t actually owe them the living that they’d like to have, even if someone else got it.

      The distribution monopoly hid many problems. Now that it’s going away, you can hide them somewhere else, fix them, or deal with their consequences. Actually, no matter what you do, the consequences will happen.

      Whinging about consequences isn’t likely to have much effect on the bottom line.

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  • With the web as the new distribution model, cable is going to fall. The networks have already started figuring this out, posting their shows in HD with embedded advertising. Take that, TiVo.
    As a consumer, I don’t have cable at my house. Instead, I wait for ABC to post Lost, and watch it for free with 5 or 6 30 second commercials inserted that I can’t get past. But I’m saving $70 – $100 per month. And the more I tell people about it, the more people are doing it. So I give up Food Network and the History Channel. For now. They’ll catch on eventually, whether it’s on their own or because advertisers are tired of spending millions on prime time commercials that no one watches. Either way, cable is going down.

  • What one has to remember is that all these medium’s were supported not by subscriber dollars but advertisers. Once they were offered a better ROI, they had to switch.

    The division between the newsroom and advertising sales worked in a scarcity model but fails when the advertising disappears.

    One thing we forget is that back in the Ed Sullivan days, marketing was front and center all of the time when advertisers were learning how to use the medium. I think that is the model we will be going back to.

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  • I suspect that this will be bigger and more transformational than the newspaper crunch.

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