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Murdoch says huge TV profits are over. By the same logic, TV networks may soon be over, too 11/14/07

Posted by Steve Boriss in NetworkTV.
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News Corp’s Rupert Murdoch said yesterday that the days when broadcast TV networks can run ordinary prime time shows and expect huge profits are over. He blamed the increasing fragmentation of audiences among the hundreds of cable and satellite channels that consumers now receive in their homes. But the situation for TV networks is about to get much, much worse. These huge profits were an artificial result of government regulation — the networks decades ago had been granted enormously scarce and valuable licenses to pipe programming into our homes.

But now that all media is converging onto the Internet, networks will lose this government-granted advantage entirely, and they know it. This Fall, the networks have been scrambling to make downloads available of their fresh prime time shows so they are ready for this Christmas’ big push by Microsoft and partners of new “media extender” technologies that wirelessly transmit programming from PC’s to TV’s. But once the networks are on the Internet, they will be competing for advertising dollars with everyone else who can produce entertainment — movie studios, independent producers, video game manufacturers, and new business forms yet to be invented. Entertainment investors and creators will now be able to cut-out the middlemen, no longer needing the networks’ supply chain to reach our homes. The playing field will be leveled and the competition will be fierce. Viewers’ preferences will determine the winners and losers. And entertainment will never be better.

Comments»

1. Walter Abbott - 11/15/07

By the end of this decade or shortly thereafter, network television as we know it today will cease to exist. Evening network news broadcasts will go dark after the ’08 elections and their news divisions disbanded.

2. Ed Driscoll.com - 11/15/07

Zero-Sum Indeed

In the New York Times-owned Boston Globe, Joanna Weiss writes, “On TV, men are the new weaker sex”:In one sense, this is gender-bending stuff as old as Shakespeare, imagining what things might be like if men were more like women,…

3. Ydobon - 11/15/07

Walter Abbott wrote “By the end of this decade or shortly thereafter, network television as we know it today will cease to exist. Evening network news broadcasts will go dark after the ‘08 elections and their news divisions disbanded.

If the news were money driven, yes. It’s vanity driven, like Hollywood, or sports franchises, or a vanity press.

Primary concern is rankings, not absolute quality. If you can’t win those, you get a signature gimmick like Katie Couric, or go for the moral superiority of green environmentalism. The sports equivalent is the superstar player on a bad team.

4. Walter Abbott - 11/15/07

My prediction about the demise of “network” news is based on the decline of said network’s entertainment divisions.

The news divisions are loss leaders – the advertising from prime-time entertainment and sports pays the freight. The vanity of funding money-losing news operations will not be tolerated by the shareholders.

5. Ydobon - 11/15/07

Walter Abbot wrote, “The news divisions are loss leaders – the advertising from prime-time entertainment and sports pays the freight.

Point taken.

WA also wrote, “The vanity of funding money-losing news operations will not be tolerated by the shareholders.

From When Do You Stop the Presses?

“At Hearst Newspapers’ San Francisco Chronicle, according to a deposition given by James M. Asher, the company’s chief legal and business development officer, losses of $330 million piled up between mid-2000 and September, 2006, better—or should I say worse?—than $1 million a week.”

Stockholders will tolerate a surprising amount.


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