Another Kick in the N*ts for Broadcast Television

We see what $5 billion can do.

Over the last few months, we discussed the state of broadcast television. This is turning into a blood bath. Each month, things only get worse.

To recap, there are three things keeping these broadcast networks alive:

• sports
• Baby Boomers
• Big Pharma advertising

Each of these was covered in the past so we will not go into them too much. The only thing we can say is that any of these could disappear at any time. Well, actually the Boomers are passing away to the tune of over 5,000 per day.

This means that cable television, in particular, is losing its audience.

Now we get a preview of what many, including myself, have predicted.

Netflix And The WWE

The deal between Netflix and the WWE is a kick in the family jewels for broadcast television. Under this agreement, Netflix is shelling out $5 billion over 10 years to air WWE Raw, their flagship broadcast.

This is showing us the direction things are moving.

Obviously, if we look at the above list, WWE doesn't fit. Outside the few that believe it is real, we are dealing with sports entertainment. This is a big difference compared to sports. However, this was a highly successful broadcast for the USA Network, something that is disappearing starting in 2025.

The fact the WWE went streaming is telling us where the money is. It should come as no surprise since we have espoused this idea for months.

If you want to see how this will unfold, look at the market capitalization of these companies:

• Apple
• Amazon
• Netflix
• Meta
• Google

Then compare it to the likes of Disney, Paramount, and Universal.

Do you see a difference? All the money resides with the technology platforms. Also, their revenues are not dependent upon media activities. This is merely a supplement to what they are offering.

What Will Follow?

Which brings us back to the crux of the discussion.

How will streaming compare to broadcast television over the next decade? While it is unlikely for sports to go exclusively streaming, we are already seeing some changes in how it is structured. The NFL already has a "pay-per-view" playoff game. We see Apple and Amazon both with some games from these major sports leagues.

While there might be some time before we see sports move to streaming, the demographics are shaping up that way. One reason the WWE can make this move is the company is now appealing to younger viewers. If we use this as the backdrop, the NBA is likely the first one in the United States to make the shift. The fanbase of this league is younger than both MLB and the NFL.

Nevertheless, the other two will follow suit at some point. If we cross the major sports off the list, we are left with Boomers and Big Pharma. We know where the first is heading so we are just left with the latter. This still is responsible for 70% of the advertising dollars on cable television networks. Will this exit as the ratings drop.

As an example, CNN, once one of the best known news channels in the world, dropped to 10th in theratings. This was behind the likes of the Hallmark Channel. This is happening during an election year, when ratings for these networks tends to go higher.

CNN is going the other way.

Naturally, one could say we are dealing with a network that lacks an identity. That would be true. The fact it is on its 3rd president in 3 years is telling. However, all the numbers for the cable news outlets are down compared to 6 or 7 years ago.

To me, this is a demographic issue more than anything else. We saw the same thing happen in the 1990s as the evening news audience started to die off. The Boomers are cable news people, Gen X is less so and Millennials not at all.

Broadcast television is feeling it from the cord cutting that is taking place. Streaming is not shaping up to the Golden Goose many predicted. However, when we get some new players in the field, like large technology companies, things can change.

As big as legacy media companies are, they are small compared to these behemoths.

Even Netflix is getting into the game.

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