Amid the streaming boom, why linear TV is attracting business – The Hollywood Reporter

When the fronts return to New York in mid-May after a two-year pandemic hiatus, television is expected to play second fiddle. While ABC, NBC, and CBS will always have their moments, Disney is expected to introduce the ad-supported tier of Disney+, while Paramount will introduce Paramount+ and NBCUniversal touts Peacock. After years of preparing to get into streaming, linear is no longer a corporate priority for the Hollywood giants.

But at least a handful of companies are bucking the trend and leaning into linear TV, hoping it will help them stand out in a world where everyone seems to be trying to chase Netflix, which is crossing itself. a difficult period with the growth of its subscriptions. slows down. “You have to be prepared to be a little contrarian at times, to defy certain norms,” ​​says Peter Olsen, president of advertising sales for A+E networks.

Companies like A+E, Univision, Fox and AMC Networks are betting that even as the pay-TV package continues to slowly and steadily decline, embracing the linear side of the business can still be lucrative – and help them bridge the gap between the uncertain present and a more secure future. “There’s always so much talk in our business about ‘It’s dead, it’s new,'” Olsen says. “Things don’t die, they just evolve. And I think what we’re doing is taking a very measured, restrained, weighted approach, which is to say, yeah, mainstream distribution is on a tough trend, right? But…there is always a way to reach people through creative distribution partnerships and all that.

The future of Linear TV is difficult to predict, and no company is willing to make big claims just to explore questions. “Older viewers may cut the cord, but younger viewers are increasingly asking, ‘What is a cord?’ MoffettNathanson analyst Michael Nathanson joked in a report in March.

However, a March 4 SEC filing from Discovery Inc. ahead of its merger with WarnerMedia sheds light on the near-to-mid-term future of pay-TV. The filing says Discovery expects revenue from its U.S. linear TV business (Food Network, Discovery Channel, HGTV, etc.) to decline 4% per year through 2025, with spending that should increase. At WarnerMedia, domestic linear revenue is expected to fall just 2% per year through 2025, possibly benefiting from that company’s portfolio of sports rights, including NBA, MLB and March Madness basketball.

Sports remain a major driver of linear television, although companies like NBCUniversal and Disney are experimenting with streaming more live events, and Warner Bros. Discovery has the option to do so in the future.

Fox Corp. CEO Lachlan Murdoch noted at his company’s annual meeting in November that trends make Fox “more valuable to cable harness because what people watch on cable are live news and live sports,” he said. “Our assets are more valuable in this package, and over time we will get a higher share of cable fees that we can take from our distributors.”

“Time not watched live has fallen off a cliff, dropping an average of -8% per year over the past 10 years,” Nathanson writes in his linear TV report. “Live viewing time, however, is stable despite the number of pay-TV households being several million fewer. Sports, and to a lesser extent current affairs, is where pay-TV continues to stand out and will continue to find a lifeline.

But many companies are betting that it’s not just sports and current affairs. In fact, they believe that the strategic moves taken by many of the biggest companies in the industry could benefit smaller, more nimble players.

A critical theme: Giants exploring the subscription video-on-demand space are actively slashing the value of their linear channels, taking some of their best entertainment fare and making it exclusive to their streaming services.

On April 8, Disney announced that Dancing with the stars, an ABC reality staple (and a favorite of marketers looking for a full-scale family show) would move exclusively to Disney+ later this year, just when the streamer’s ad-supported tier is expected to make its debut. Paramount, likewise, does its Yellowstone spinoffs exclusive to Paramount+, while NBCUniversal Fresh Prince of Bel-Air the reboot is a Peacock exclusive. For these companies, the best content is increasingly streaming only.

“The big consolidation trend has arguably given people the scale to have robust streaming services, or subscriptions, or a mix, and the people who have those subscription services at scale are pushing hard,” says Kevin Krim, CEO of The advertisement EDO technology and analytics company. “And those that aren’t as big have to live with what they have, which is still solid linear networks that have an audience.”

And paradoxically, it can help reinforce the linear movements performed by competitors. “Discovery pulling content to go directly to their streaming platform creates an opportunity,” Olsen said, noting that A+E is aggressively moving into food TV. “So you look for these opportunities, you find these white spaces and say, you know what, we can make our way in this area.”

In some ways, global pushes from NBCUniversal, Warner Bros. Discovery, Paramount and Disney to streaming are creating new windows for companies that don’t have the same scale, especially to maximize revenue through their linear audiences.

That’s not to say these companies ignore streaming. All are in this sandbox, to varying degrees. AMC offers an SVOD service called AMC+ and a suite of free ad-supported streaming channels (called FAST channels in industry jargon – some apps, some channels in streaming services, but all free and funded by advertisement). A+E owns its own share of FAST channels and makes deals to sell its content to other streamers. Fox owns the Tubi FAST service and has a niche subscription offering with Fox Nation.

The bet is that as long as the programming is of very high quality, audiences will watch it, whether on a FAST channel or, yes, linear TV. “We’re an original content company, we’re not known for showing reruns of other people’s stuff, so when you make your own stuff, own your own stuff, it gives you maximum flexibility to use it on linear and then use it on any platform in any way your customers want it to be used,” said Rob Sharenow, president of programming for A+E Networks.

New technologies like addressable ads, which bring the targeting capabilities of digital ads to TV, can make linear TV a bit closer to streaming, making it a better option for marketers looking to both scale and specificity. “I feel like television is getting a lot more exciting, a lot more dynamic, a lot more efficient,” said Kim Kelleher, president of advertising sales for AMC Networks.

Best of all, linear audiences still benefit from a water-cooling effect of live TV, which persists even amidst a shrinking package, but which is becoming harder and harder to find.

“There’s always a community aspect to watching something live on the day,” says Kelleher. “You watch Twitter explode, and it’s not just scripted drama, we see it with our love after confinement series. It’s fun, you feel like you’re part of something, like you’re in a bar full of people enjoying the same moment, the same joy, the same outrage.

But linear is in some ways the glue that ties it together, and these “countercurrent” companies, to use Olsen’s formulation, believe they can remain not just viable companies, but utterly compelling companies. , for the foreseeable future. Kelleher adds, “It’s a pick and choose adventure from a viewer’s perspective, and many of our viewers are still cable subscribers.”

A version of this story first appeared in the April 27 issue of The Hollywood Reporter magazine. Click here to subscribe.

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