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Cable news has no protective moat

We’ve known for years that the cable bundle has been shedding millions of subscribers, but it’s only relatively recently that we’ve begun to grapple with the effect this has had on linear TV viewership. In a recent Business Insider column, for instance, Peter Kafka expressed shock at how much the Daily Show’s live audience has shrunk since Jon Stewart left in 2015. As Kafka astutely put it, “this is one of those things where you can know this stuff intellectually — and still be shocked when you see it laid out.”

But while cable viewership is down across the board, the situation is especially dire for cable news. A recent report in Semafor noted that audience size for programming around the Iowa caucuses this year was less than half of what it was in 2020. On a year to year basis, cable news audiences have shrunk by something like 20% just between 2022 and 2023. That’s a lot!

That’s why I smirked a little when I read a Variety article titled “Can Don Lemon, Megyn Kelly and Tucker Carlson Really Steal Viewers From TV News?” For me, the answer is a very obvious ‘yes’ — not because I think those three hosts are particularly talented at what they do, but because digital content like theirs has been eroding cable news audiences for most of the past decade. What I found most confounding in the article was this quote:

“There are real reasons why no traditional news star has decided to make the jump to digital — without being pushed,” says one talent-management executive. “To create meaningful journalistic content — and to pay people meaningfully for it — you need the ability to pool resources and amortize costs across projects and people. We haven’t figured out how to do that digitally yet. We need to!”

I don’t think this could be any further from the truth. In fact, I think cable news has one of the most easily replicable formats, and as such it has virtually no protective moat that will shield it from the rise of the Creator Economy. 

To better understand what I mean, consider a cable network like ESPN. It pays billions of dollars a year for sports broadcasting rights, and those rights help shield it somewhat from competition with the thousands of sports podcasts and other networks that have emerged online. After all, it’s not a coincidence that the NFL continues to dominate TV ratings, even as cable subscription numbers shrink. The same can be said for premium narrative series produced by Hollywood studios; there’s a reason that no YouTube channel has reached the cultural significance of, say, a Game of Thrones or Succession.

Cable news, meanwhile, has no such edge. Flip on Fox News, MSNBC, or CNN on any given night, and you’re likely to see variations of the exact same thing: an anchor interviewing a panel of pundits about that day’s news. While these networks ostensibly do some news gathering, the overwhelming majority of their programming is devoted to talking heads punditry, and it takes very little effort or resources to replicate this format online.

Consider this: just about any journalist these days can shell out $40 a month for a Riverside account that will allow them to record high quality remote video interviews with guest experts. With minimal editing, they can upload these longform interviews as both podcasts and YouTube videos, then chop up the most newsworthy clips for distribution on platforms like TikTok, Instagram Reels, and YouTube Shorts. The format has been so successful that it’s now completely normal for presidential candidates to devote just as much time and effort to the podcast circuit as they do sitting down for cable news hits. 

This is why I was so skeptical of the longterm prospects of CNN+, the standalone streaming app the network launched and then quickly shuttered back in 2022. Prior to its launch, I wrote that its programming was “not very differentiated from what appears on other cable news programs, not to mention thousands of podcasts and YouTube channels.” I didn’t see any scenario in which consumers would seek out and pay for that programming outside of the cable bundle…

…which is why I’m so interested in watching how Mark Thompson steers the network as its newest chief executive. Thompson played a substantial role in The New York Times’s successful embrace of a digital subscription model, and he’s publicly announced that his strategy going forward will be focused on building CNN’s digital offerings. He’s hinted that this may involve the launch of some sort of paid subscription product, though it’s much too early to say what that product may be. 

Whatever it is, it can’t simply involve transferring its TV programming to the internet and slapping a paywall onto it. Even with its extensive news gathering prowess and great brand, CNN doesn’t currently produce content that’s distinctive enough to drive subscription conversions. Even the NYT — arguably the most successful digital subscription publisher in the West — has depended heavily on niche, non-news products like games and recipes to continue growing its business. 

While I don’t doubt Thompson’s business acumen, I think he certainly has his work cut out for him as he dreams up products people will actually pay for. News punditry may have kept CNN afloat and profitable during its cable era, but its digital business will need some sort of moat if it hopes to thrive.

What do you think?

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Quick hits

I'm always reflexively skeptical when a digital media company raises money at a valuation north of $1 billion. It's not that I don't think a media company could ever reach that threshold, it's just that several companies that raised at that valuation later IPOed/exited at a MUCH lower price. [Axios] In fact, has there ever been a purely digital media company that’s exited at a 10-figure valuation? I’m struggling to think of an example. Yahoo and AOL had a lot of media properties when they sold, but they also ran some hugely popular tech assets.

"[The Ankler] raised a $1.5 million seed round at a $20 million valuation in June 2022, but has since returned $300,000 ... 'We didn't need it. We've never touched it. We've been profitable almost from launch.'" [Axios]

This is a great example of a legacy media org repurposing its already-existing content in an innovative way. [WashPo]

A surprising number of shuttered publications end up sold off to SEO farms that squeeze the last few remaining pennies from the site's legacy brand. It's like the burning embers of a white dwarf star. [Wired]

I actually think most local newspapers shouldn't have a Washington bureau, and in cases where they do have a Washington bureau, that bureau should be 100% focused on covering federal issues that affect the newspaper's home state. [CJR]

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More quick hits

I was interviewed about AI's potential impact on the media! I did not come off as very optimistic! [The Upgrade]

This is kind of cool: a social network that launched as an offshoot of a popular newsletter: [The Verge]

You could argue that The New York Times is just as much a games company as it is a news company. [Axios]

I think Amazon is making a mistake here. Launching a cheaper advertising tier is one thing, but purposefully creating a shittier experience for your longtime customers at the price they're currently paying? That's crossing a line. [WSJ]

The most profitable part of WB Discovery is its gaming division. [Variety]

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