Who Shot Network Television?

Posted: December 24, 2008 in Digital Media, Financial News, Innovation, Programming
Tags: ,

You don’t need a CSI team to see that the wounds have been largely self-inflicted, but the networks can pull through if they recommit to innovative programming, says a media veteran.

A couple of key developments have been overlooked among the job cuts and bankruptcy filings in Media Land of late, but they’ll have huge significance to the future of network television.

First were the executive changes at NBC and a restructuring that will put its studio and network under one management team. NBC co-chairmen Marc Graboff and Ben Silverman will have the newly combined operations under them.

Once again the big winners will be those who create and own great content.

Next came a speculative piece in TVWeek that Disney is considering having the ABC Network and ABC Studios report to a single executive, possibly merging its development teams.

A few years ago, when CBS separated from Viacom, CBS Network President Nancy Tellem was also given authority over the Paramount TV studios.

In each case, there are probably personality issues behind some of the changes and certainly cost issues behind the consolidation. But the real message here, the one that will resonate for years to come, is that network television is losing its grip over distribution and needs to concentrate its creativity on programming.

As it becomes ever easier to deliver video to a growing broadband audience, many more will continue to do so very successfully.

Many of the reasons television networks exist are over. Networks built a “network” of local stations around the country so they could deliver the same programming in each city and sell advertising at the national level around that programming.

How long has it been since you watched a TV show on a set getting its signal over the air through an antenna? The country watches TV on cable and satellite today, and both are capable of delivering nationwide programming without the need for a local broadcast partner.

The creation of cable entertainment networks like HBO, Showtime, TNT, A&E, and Discovery; sports networks like ESPN; and news networks like CNN, CNBC, MSNBC, etc., have all chipped away at the nationwide content monopoly once held by the big television networks. As distribution finally reached virtually every home in the nation through either cable or satellite, many of these networks were able to create original programming that could pay for itself. And for the first time, studios and producers could create television programming that didn’t have to be bought by a network to succeed. In the end, CBS, NBC, ABC, Fox, and even the CW are practically on an even par with the most successful cable and satellite networks. They can reach almost exactly the same audience.

When the Internet is hooked up to most home TV sets, which will happen over the coming decade, anyone with a website will be able to reach all the homes in the country. At that point, even cable and satellite networks will have diminished power. It will be possible, for example, for YouTube to create a scripted drama that appears every week and is viewable on every living room TV set. And YouTube and Google may have the marketing clout to bring the audience in for some innovative programming. It’s fair to assume, though, that none of this will provide for any change unless these new players produce content people ultimately want to see.

The TV networks will still exist, because it will still be more efficient to deliver a lot of programming down a point-to-multipoint network, rather than a fully interactive one. When scores of millions of viewers all want to watch one show at the same time—the Super Bowl is a good example—it would be incredibly expensive to have them watch over an interactive platform. So there will be pipes into our homes with one-way broadcast capabilities, using either cable or satellite technology. They will still have the advantage that they can cheaply deliver programming on a schedule to every household.

So don’t count out our TV networks entirely. It’s no accident that whether you can get 15, 60, 100, or 1,000 TV stations in your home, the four or five you watch the most are the traditional broadcast networks. They each spend a small fortune to develop dozens of shows each year, and only ultimately offer the best of the lot to the public. That system has created shows of increasing quality and, one hopes, will continue to do so. And it has created marketing machines that know how to promote the programs to broad audiences. And they can grow more revenue for those shows by making them available on all the other digital platforms, much the same way they profit from reruns and DVD sales today.

If they can keep creating first-rate programming (through their studio operations), the networks can still dominate the programming scene. Ultimately it’s Leslie Moonves’ enormous talent as a developer of great programs that can save CBS as a television powerhouse.

But the networks won’t have the advantage of being able to hold their dominant positions even if they screw up the programming, which they have enjoyed in the past. They won’t dominate the programming the public gets to choose from. And the competition will continue to grow as more and more content creators get access to TV views through the new distribution platforms.

So once again the big winners will be those who create and own great content. They will, as they always have, find the best way to get that content to people who want it. As for the networks, look for them to slim down to become more like studios.

Larry Kramer is senior adviser at Polaris Venture Partners, a national venture capital firm. He served as the first president of CBS Digital Media. Prior to joining CBS, Kramer was chairman, CEO, and founder of MarketWatch, Inc. Kramer spent more than 20 years in journalism as a reporter and editor at The San Francisco Examiner, The Washington Post, and The Times of Trenton.

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