3 weeks ago
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TV’s annual Upfront Week is supposed to be devoted to TV-industry build-up. Instead, executives have unveiled new and ambitious plans that will ultimately break the whole industry down.
Three of the best-known names in TV this week announced their intent to open up new shops off the traditional screen. Disney’s ESPN, after much chatter, will put all its sports coverage and studio programming on a new direct-to-consumer streaming app that executives hope will drive a business that is more heavily dependent on broadband video outposts like Hulu and Disney+. CNN, one of the pillars of the old-school cable bundle, intends to debut two different digital shingles, one tied to its news coverage, and another linked to news about the weather. And Fox Corporation, perhaps the staunchest defender in recent years of staying tied to cable, said that it too, would put all its TV offerings — including its coveted Sunday NFL telecasts — on a new streaming service it calls Fox One.
At the end of the week came the pushback: Charter Communications, one of the biggest cable and broadband distributors in the nation, said it intended to grow larger, with an acquisition of privately held Cox Communications, the oldest operator in the sector. Despite their growing interest in streaming, the aforementioned media conglomerates still need the cash that alliances with Charter generate, and Charter CEO Chris Winfrey has not been shy in the past when it comes to pointing out how direct-to-consumer streaming services degrade the traditional cable business.
You would have been hard-pressed to hear a harsh word from either side this week. During a call with investors Friday, Charter’s Winfrey said the company stood ready to help TV programmers market themselves better, and wouldn’t seek to go to war every time a carriage deal came up for renewal. And the TV companies also sounded a conciliatory note, taking pains to say their new apps were aimed at so-called “cord nevers,” not the crowd that still subscribes to cable.
“We’re targeting the service entirely to the cordless community, the cordless market out there,” said Lachlan Murdoch, Fox Corp.’s CEO. “It would be a failure of us if we attract more connected subscribers or we do not want to lose a traditional cable subscriber to Fox One.” Top executives at ESPN and CNN offered similar thoughts, noting that cable subscribers would be able to get the interactive and personalization features offered by the new streaming services, so long as they went to mobile apps and proved their cable alliance.
The funny thing about cord cutters is that their numbers are growing — and the size of this group is being fueled, obviously, by people clipping their ties to cable. The launch of three services that will make “Sports Center” and Fox’s Sunday football games available via streaming can only serve to accelerate the trend.
In April, Charter revealed that it had lost 60,000 Internet customers during the first quarter of the year, as well as 181,000 video customers. Rival Comcast disclosed that it lost 199,000 broadband customers, more than analysts had expected, while also parting ways with 427,000 video subscribers.
The TV networks know this. And they know their future revenue from cable is only going to shrink. Subscribers to ESPN and ESPN2, two of the most expensive networks for distributors, are seen falling to 57.9 million and 57.8 million by the end of 2026, according to projections from Kagan, a research firm that is part of S&P Global Market Intelligence. Those figures would represent a tumble of about 11% in each network’s subscriber base from the end of 2024.
Warner’s CNN is no better off. The news outlet is seen shedding nearly 9% of its cable subscriber base between the end of 2024 and the end of 2026, according to Kagan, with traditional customers falling to 60.4 million by the end of the period.
And Fox, which has resisted putting most of its sports and news offerings on broadband at the same time it runs on linear, can’t outrun current trends either. The subscriber base for Fox Sports 1 is projected to fall nearly 9% to 57.2 million by the end of 2026, according to Kagan, compared with 62.8 million in 2024. The loyal subscriber base of Fox News Channel is also expected to erode, falling about 8.8% to 58.9 million by the end of 2026, according to Kagan, compared with 64.6 million in 2024.
The signs are obvious: The future audiences for the new streaming services will come from the subscriber base of the old-school TV networks, whether the parties on either side of the equation admit it or not. Once a cable subscriber decides to give up on the arrangement, they become part of that “cordless” audience the media companies see as their natural market.
The media giants have other reasons to bolster streaming. After several fertile years, some of the glitz is rubbing off the medium.
An advertiser who wants to run a commercial on Netflix’ “Stranger Things” or Peacock’s “Poker Face” can do so any time they want, so long as the show remains on the service. That’s a very different proposition being offered than the one that existed when a couch potato could only see their favorite episodes once or twice a year on the linear schedule.
And that dynamic is influencing ad sales ties to streaming outlets. Last year, in the annual “upfront” market, when TV networks try to sell the bulk of their commercial time in advance, rates for streaming inventory fell by double-digit percentage ranges, a massive “rollback” to which TV networks hate to agree. In early upfront talks this year, advertisers are pressing for similar downturns in rates, according to executives familiar with current negotiations, while the media companies are instead pushing for increases.
More sports and news programming help sweeten those deals. Scripted comedies and dramas can be watched any time a viewer likes, but news and sports programs are still seen as perishable. Bret Baier’s interview with a head of state has its greatest impact at the moment it airs, as does any match-up between teams from the NFL, NBA or MLB.
When such stuff can be streamed, it leaves less oomph for cable. Charter’s Winfrey sounded sanguine on Friday, but not too long ago, he was ready to fight, accusing Disney in 2023 of degrading cable networks like Freeform and Disney XD while putting new and attractive premium series on its own streaming outlets.
Executives this week have portrayed all their new ventures as smart moves that will help keep peace in the present. Make no mistake: networks and distributors will be fighting over all of this in the not-too-distant future.
English (US) ·