Week In Review: No One Is Watching Linear Broadcast TV, Cheddar Got Bought By Altice
1. No One Is Watching Linear Broadcast TV
Okay, maybe not no one, but the numbers are way down. As per Nielsen, broadcast C3 ratings in the first quarter dropped 17% versus last year, with all four major broadcast networks taking major hits in the coveted 18-49 demo. (Fox, which has a heavy sports presence, was the only broadcast network not to see double digit dives.)
Why It Matters
The upfronts are this week, and all of the networks are selling off their 2019 and 2020 ad inventory to happy buyers who are drinking the “nothing else gives us reach like TV and there are no brand safety issues” Kool Aid.
Which is true on one level, but on another, as Ad Age’s Anthony Crupi points out, the sinking ratings “effectively means that fewer than 5 percent of the 128.9 million Americans in the key demo [18-49 year olds] saw your ads while they watched network TV.”
So there’s that.
It’s not all that surprising either. Once viewers get used to no commercials or very limited commercials, it’s hard to get them back to lots and lots of commercials. A point that Hulu’s Peter Naylor drove home during their upfronts this week, when he pledged to limit ad pods to 90 seconds and greatly reduce the amount of repetition, especially for binge viewers.
Compare that with the four and five minute ad pods that consistently run on broadcast TV and it’s no wonder viewers are fleeing left and right.
Especially given how much of those network ad pods are given over to 60 second DTC Pharma ads, a move I assure you the networks will come to regret in years to come, as it becomes evident how large a role they had in driving viewers away from broadcast TV with their lengthy and frequently inscrutable messages about death, dying and explosive diarrhea.
What You Need To Do About It
If you’re a broadcast network, you can still fiddle while Rome burns—revenues are up because right now there’s still no real alternative and Mark Zuckerberg is the only person on earth who manages to get more bad press than ISIS, Hitler and Les Moonves combined.
If you’re a major advertiser and you’ve been thinking about putting more money into OTT advertising and/or addressable as an alternative to broadcast TV, you should read this really well done Special Report.
If you’re a viewer and for some reason you haven’t checked out OTT, it’s not all 90s reruns and originals. You can watch all those 2019 broadcast network shows (or most of them, anyway) on platforms like Hulu, only a day or two later and with less than half the commercial load.
2. Cheddar Got Bought By Altice
Cheddar, the Millennial-focused business news network with incredibly fascinating, insightful, knowledgeable, charming and photogenic guests, was purchased by Altice for a whopping $200 million. What the company really bought though was rights to its dynamic CEO, Jon Steinberg, who will take over a larger news division at Altice (Altice News) that combines Cablevision’s News 12, Cheddar and i24NEWS, a 24/7 international news network based in Israel.
Why It Matters
Eyebrows were raised about the price of the deal, given that Cheddar only made $25 million in ad revenue this year. (They are on track, CNBC reports, to make $50 million this year. But still…)
Mostly, though the deal seems like a bet on Jon Steinberg and his ability to make news content that appeals to a new generation while getting buzz and advertising dollars from an older one.
(TV[R]EV knows Jon well and can’t fault them for that.)
It’s also significant in that Cheddar is a good example of a digital first company that circled back to TV—they were launched as an OTT service, broadcasting from the floor of the New York Stock Exchange, banking on desktop and mobile users, and then got picked up by various vMVPDs and MVPDs, a strategy helped by the fact that unlike traditional cable networks, Cheddar did not charge carriage fees.
It’s a good model for how new networks will be launched and how a digital-first strategy can help with building audiences and with building revenue: Cheddar makes the bulk of its money from licensing its content to other platforms and then taking a cut of the ad revenue that’s generated.
One particularly clever deal had them supplying business news to Tegna’s local stations, which gave Cheddar wider exposure and let those local news shows seem like they had someone on the floor of the Stock Exchange.
Teaming with Altice allows them to keep selling ads/raising revenue the ways they have been, while taking advantage of the more traditional linear deals available through the international MVPD.
What You Need To Do About It
If you’re an MVPD or other aggregator, high five to Altice for what’s likely to be a very smart deal, creating an asset that sets them apart from other MVPDs, an asset that they can also offer to their competitors worldwide.
If you’re a rival news platform, you might want to start taking to your investment bankers, because Altice’s rivals are definitely going to start sniffing around.
If you’re an advertiser, talk to Jon Steinberg—Altice News had a variety of traditional and non-traditional ways to get your brand in front of the right eyeballs and Jon's the man to make it happen.
And if you’re an Altice customer, you should definitely check Cheddar out. Because, you know, all those really awesome guests.
