1:48pm PT by Tim Goodman
Critic's Notebook: Revenge of the Broadcast Networks?
NBC chairman Bob Greenblatt, addressing a room full of critics at TCA, had already made some startling claims before he went to his PowerPoint presentation. He said something very minor but very important: "Now, while I only have NBC data to share here, I’m sure some of my friends at the other broadcast networks will tell you similar stories."
If he's right about that, the story they're going to tell in the coming days is an amazing one that, until now, they haven't really shared (certainly not with this much confidence).
And that is that the broadcast networks are making money — in some cases, lots of it — primarily because they've learned how to make significant ad money off of digital views on multiple platforms. It also appears they're getting paid for people watching shows, in some cases, well after the live-plus-3 and live-plus-7 windows — the most desirable viewing opportunities, from an advertising perspective — have closed.
That's not just big. That's a game-changer. Primarily because it would definitively alter the narrative that certain people have been talking about (ahem) and that the networks are very tired of hearing: that they're dinosaurs, built on an economic model (advertising) that has been supplanted by a subscription-based, commercial-free service that was first the method of premium cable channels and then, in the world of broadband streaming, gave rise to digital platforms like Netflix, Amazon and Hulu.
But it goes well beyond that. The broadcast networks are a very distinctive kind of "old school" entity — locked into three-hour blocks of programming every night (four on Sunday) totaling around 22 hours each week that has to be filled, often by shows that have been made the same way and on the same yearly cycle with built-in and very expensive cost structures.
Historically, this is not a lithe Goliath.
Broadcast network television is a business model created in an essentially noncompetitive bygone era that was crippled by the onslaught of cable and, during this modern rise of schedule-free, anytime, on-demand, technically proficient streaming services, left for dead.
And, just as a reminder, that was mocked in public (once again, ahem).
Of course, that mocking was justified. Ratings for broadcast networks tumbled at first and then went into a harrowing free fall. Networks were not just slow to react; they had no discernibly plausible action to take. Cable channels (and later, streamers) had no need to fill seven nights a week with 22 hours of programming. Nor did they have the burden of the big-tent philosophy — of creating "broad," mass-appeal content that would draw in the most people while alienating the fewest.
Audiences (and certainly critics — and then Emmy voters) took to the more sophisticated and challenging fare of the cable and streaming worlds. DVRs and time-shifted viewing — and increased content everywhere — eventually ate away this ancient broadcasting idea of overnight ratings. Cable channels (and their ever-increasing content) proliferated, technology wrought streaming that people didn't want interrupted with stupid ads (so subscriptions got sexy as linear platforms got moldy), and, well, here we are.
That's a fast-forwarded, contracted bit of history, but it's true, and this part is also key: Networks had almost zero answers to any of this change, this evolution. The costs of making television didn't go down, certainly not on the broadcast side, but ratings sure did. Was Madison Avenue going to pay the same ad rates for lower Nielsen ratings? Could non-Nielsen digital numbers — clicks and views — be trusted?
This conundrum — which is way worse and more complicated than articulated here — is what faced ad-supported broadcast networks. And here's maybe the most important part of the story: Networks admitted the challenges as they suffered declines.
They suffered in public. And for a very long time.
That's the business part of the story. And while broadcasters tried to figure out this new world as the old shifted under their collective feet, the nonfiscal story being told repeatedly in the zeitgeist did significant damage: Cable programming and much of the offerings from streamers were of a higher artistic quality — more complicated, more ambitious, drawing in the best writers and actors and directors, acclaimed by critics and feted with awards that rarely went to broadcast series.
Again, it's essential to reiterate that, through these long years, even though those from within the broadcast industry began slowly painting a more hopeful picture than those from without, there wasn't a lot of concrete proof, and there certainly wasn't cocky gloating about fiscal gains or even confident assertions that monetizing the digital world had been figured out.
Oh, and by the way, I wrote a column on Tuesday noting that running a broadcast network was the worst job in television (a sentiment shared by plenty of others in the industry).
It wasn't, ahem, the first time I'd written that. But at least it was sympathetic to the difficult task at hand.
And then something not very considerable (or so it seemed at the time) happened Tuesday night. I had drinks with Mark Pedowitz, who runs The CW (which is, yes, a broadcast network, though one assembled slightly differently than the others). That casual meeting was set up before my column appeared, and Pedowitz joked that, contrary to my point, he quite liked his job and felt very confident about the state of the industry. Pedowitz has worked at other networks and has a business background. I asked him to — in so many words — explain how networks can make money. You know, low ratings, etc. And yes, I know enough about international sales and OTT deals and some other things to realize there are ways, in 2017, to offset some of the hurt.
Conveniently, The CW had been forced, ahead of its more successful network counterparts, to learn now to monetize digital. So Pedowitz explained some things. I can't say I understood it all — words, not numbers, for me. But he was unshakable in his belief that broadcast networks were in a better place than most cable channels. His confidence was high. And on Wednesday, as the first network president to meet the assembled TCA masses, he reiterated it publicly:
"Well, all I can tell you is, for many years since I've been in the industry, from a broadcasting point of view, they've been saying broadcasting is dead. It's far from dead. … The one thing I am confident of is that, the way The CW is situated today as a multiplatform player, it's going to be around for a hell of a long time."
Greenblatt, on Thursday, was thus the second network head to speak at TCA, and he raised both barrels:
"It's great to have a lot of momentum going into next season, and as you all know, because we have the Super Bowl and the Olympics in February, I think we will be No. 1 in both the demo and in total viewers next year, which is something we haven't accomplished since 2002. I know sports will play a big part in that, but I'm optimistic we will also hold our 18-49 lead, even when sports are factored out. All of this makes me very bullish about our future and the future of broadcasting in general. While we know that linear viewing is declining, delayed viewing and digital are not only keeping the broadcast business afloat, but actually going pretty strong. I know the general consensus for a while has been that the broadcast networks are aging dinosaurs just getting closer to extinction. When I came to NBC almost seven years ago, people couldn't understand why I would want to leave a thriving premium cable network for a business that was all but dying. But I'm happy to say NBC is very much alive and well today, and I'd love to change that narrative a little."
And then he did his best to do just that:
"I don't think the broadcasting narrative should be linear versus digital anymore, but rather linear plus digital. I think it's a great time to be a broadcaster, but we also need to redefine what 'broadcaster' fundamentally means. And first, I think, a whole new business model is evolving for us, which is being driven by new technology and the will of the viewer. Our goal isn't to just attract the most eyeballs to the network anymore, but to bring content to audiences wherever and whenever they want to watch it. If a viewer wants to watch live through an antenna or a cable provider, that's great. If they want to watch on TV through Roku or Chromecast, great. With a Hulu subscription or on VOD, great, or on a phone through the NBC app, great," he said.
"Each platform reaches a different audience, and we want to get as many of them into the tent as possible. Furthermore, we're now reaching more younger people too because viewers on digital and over-the-top platforms are 20 years younger on average for us than those watching the network. … We're also monetizing virtually all of these platforms, too. I want to stay focused on viewership rather than monetization, but it's not a coincidence that NBC Entertainment just had its most profitable year in 17 years — and we just wrapped up our best upfront in eight years."
Bold? Yep. And so was this, particularly:
"The world has changed, the audience has changed, and our business model is changing. And I could use your help getting the word out or at least giving broadcast television the benefit of the doubt. I know the live/same-day rating is the quickest measure of success, and we're all used to that, but it's really not the true measure of viewership anymore, or monetization either."
Well, OK then.
I confess that some of that felt like it was aimed in a specific direction (two of my THR columns were used in a graphic NBC prepared that showed critics and media harping on the networks failing).
I would be happy if broadcast networks were making money, having solved the digital puzzle and old-school Nielsen issues to the approval of the ad world at large. It's not like I want them to go broke. What's the point in that? As one of the few critics still covering the industry rather than just writing reviews, it's been clear that the inability of broadcast networks to modernize, embrace change and reimagine their business model has been a ceaseless and fascinating story for years. And one of the components through those years — how networks manipulated their content to create a better outcome — relates directly back to me as a critic. When network shows tried to become more like cable shows — darker and, arguably, more niche — it didn't work. Course-correcting back to less challenging, easily digestible mainstream appeal hasn't worked particularly well, either, to this point.
Deconstructing how broadcasters met the challenges of reinventing their place in the industry was, ultimately, ongoing failure analysis.
If the networks have fixed things, have figured out how to make money at what they do — if that narrative has truly changed, it's huge news. And good news. It would also be, at its most basic, news to pretty much everyone in that room on Thursday.