Communication

Feverish and Miserable

For the past eight days I have been running a fever. Along with the fever, comes a side of headache and sore throat.  I feel miserable.  (Although my Dad says that miserable is a personality trait, not a symptom).  I have been stuck inside the four walls of my home to avoid infecting others.  All of which is to say that I’ve been watching a lot more television than usual.

While watching the tube, I’ve noticed that Canada’s television broadcasters are in a great war with Canada’s satellite and cable companies.  Duelling TV ads are all over the place. The broadcasters are fighting for “local television” while the cable companies are against a “TV Tax“. 

Essentially the business model of the broadcasters no longer works.  Advertising dollars have become so fragmented that it is almost impossible to generate enough advertising revenue to support local TV stations.  At the same time, the rise of technology has made it more cost-effective to deliver national  programming.  Local content has all but disappeared on television.  (In fact, local news has historically been a requirement of federal regulators, not a  demand of consumers).  The same thing that is happening to the newspaper industry is happening to television.

So the broadcasters are attempting to get a slice of the cable companies’ distribution pie.  Failing that, they are now  attempting to add a surcharge to cable bills to pay for “local television”. Consumers don’t differentiate between the content of television and its distribution.  They will most certainly see this as a price increase on the total cost of television to them.  The cable companies are resisting, as they realize that the additional cost will likely reduce their customer base. Hence the advertising war.

So the question is, why are these two industries fighting over a shrinking pie?  In the short-term, it certainly makes sense.  But in the long-term, even this battle appears to be senseless. If people valued local television, they’d watch it.  If they watched it, advertisers would buy advertising.  Fewer and fewer people are watching TV. This is especially pronounced among the under 30 set.  This is a problem for both the cable companies and the broadcasters.  Eventually there won’t be enough cable subscribers to support the cable companies.  The good news for the Canadian cable companies is that they have  multiple streams of revenue, including internet distribution.  This cushions them from the eventual loss of the tv distribution business. 

The networks and the distributors of television are both missing the long game — TV is dying.  Fighting over the leftover scraps is not going to change that. So what is the solution? Better content? Different business model? Actually delivering local news?  Perhaps they would be best served by thinking about the long game — how to transform the television business to meet the demands of the future.  I’m not sure what the long game looks like for TV or newspapers.  But I do know that the sky is falling, and no one seems to be helping to solve the problem.

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Categories: Communication, Ideas, Strategy

2 replies »

  1. Colleen – while I agree with much of your commentary – I feel it might be a little pre-mature to sign the death warrant of the ‘business model’ and TV. Also – this entire debate is fraught with incredulous claims.

    First -the TV matters group single out the Cable companies only – why is that? There proposed ‘fee’ would apply to Satellite companies as well – and their 2,700,000 customers; Right out of the gate – they are misleading the public – not a good idea if you’re trying to build trust !!

    Second – as the distribution consortium points out – they broadcasters have made no commitment to direct the $$ to local programming – and already spend $800 million buying US programming. So what exactly would they do with the extra cash?

    Third – the broadcast consortium had no qualms for 50+ years while the cable companies re-distributed a (better) signal – to an audience far bigger than could be accomplished by their antennas. Perhaps the cable companies should send them a bill for the ad revenue generated from the incremental viewers they delivered.

    Fourth – the CBC !! We already subsidize the CBC to the tune of $1,000,000,000 via our tax dollars – now we have to pay for them again? And we do this so they can bring us Jeopardy and Wheel of Fortune???
    Yes this particular business model is busted!!

    Fifth – while the TV broadcasters complain about having their signals ‘stolen’ – they happily applied and got ‘simulcast’ enforced – which essentially allows them to re-broadcast onto another channel – and is enabled by the very same cable & sat companies who they detest so much !!

    Sixth – the biggest hypocrite in this whole debate has to be Bell ! While CTVglobemedia begs for the $$, Bell TV is saying it won’t pay. So CTV can’t even convince it’s parent & sister companies on the merits of this proposal – why should the Canadian public be suckered in !

    Seventh – I note on my Sat bill that I am now being charged a mysterious 1.5% service fee for “The Local Programming Improvement Fund (LPIF)” – a forced tax – which goes directly back to the broadcasters – for which I suspect there will be little to no transparency. Now they’re back looking for more – sounds like a double-dip to me – as they seek another ‘forced’ contribution to their business

    Lastly – is the model broken? Perhaps – but there is way too much mis-information to draw that conclusion definitively.

    Perhaps the answer is to let consumers decide what channels they want to pay for – and which they don’t. The Sat & Cable providers have the capability to deliver specific channels (at least in a digital world) and to bill accordingly – so let’s open the whole thing up – then I can pay only for what I really want – and the broadcasters can set their price.
    But in that context – let’s get rid of all the subsidy’s and LPIF’s and all the other hidden costs within the system.

    That would be a fair, honest and market driven solution

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