Michael Wolff: 8 Hollywood Predictions for 2015

Predictions 2015 Murdoch Beach Illo - H 2014
Illustration by: Thomas Kuhlenbeck

Predictions 2015 Murdoch Beach Illo - H 2014

Comcast will offload NBCUniversal, Facebook will air TV shows (even sports) and Rupert Murdoch will "retire" as TV becomes a three-pronged business and digital brands decide channels are their way forward

This story first appeared in the Jan. 9 issue of The Hollywood Reporter magazine.

The beautiful thing about predictions for the new year is that nobody predicts a continuing muddle. And yet confusion and untidiness would have been the correct call for the media, particularly television, in 2014 (as well, come to think of it, as most else). Rupert Murdoch threatened to recast the industry with an acquisition of Time Warner, but he retreated. Netflix made a deal with Comcast for faster service and then said it was adamantly and morally opposed to such deals. Facebook chief Mark Zuckerberg announced that the future of the company was video -- hence media -- but that it too was a utility, hence, very much not media. One of the biggest question marks in Hollywood, the timing of 91-year-old CBS and Viacom owner Sumner Redstone's exit from the business, advanced another year. The television industry entered the year robustly and left it in a streaming haze of a serious advertising and audience decline, existentially. So here are the clarity tentpoles of 2015, a year in which one can reasonably hope the noise clears and the fog lifts:

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1. RUPERT "RETIRES" Even with air quotes, this will be a focusing event -- the next Murdoch epoch begins. But such a new status, from chief executive to merely grand eminence (he'll be 84 in March), necessarily depends on someone else named Murdoch becoming CEO -- or, even better, many Murdochs rising. With Murdochian stubbornness, James Murdoch -- rehabilitated, at least in his father's eyes, from the British hacking scandal taint -- will get the top job at 21st Century Fox. To boot, his brother, Lachlan, will become chairman, and his sister Elisabeth will take over Fox's biggest portfolio, its broadcast and cable business. In this scenario, Chase Carey, who now leads Fox, truly would retire. Carey's impulse and function has been to temper his boss' us/them instincts, but the Murdoch children will be hell bent on fulfilling their Murdoch destiny -- the current phase of which is to become the dominant power in the worldwide television business. Time Warner be damned, the Murdochs in 2015 will commence an acquisition spree not seen since their father invented the modern media conglomerate in the 1980s.

2. SUMNER "RETIRES" Redstone is, second only to Murdoch, the father of the modern media business, with his empire of cable and broadcast assets strategically transformed from a wholly ad-supported business to one now more or less evenly divided between ad sales and other fees. For several years now, Redstone's age (he'll be 92 in May) has held Hollywood in a certain will-he or won't-he limbo. With his intentions always unclear (and likely shifting), it's an all-bets-off world when Redstone departs the media veil of tears. Philippe Dauman, the CEO of Viacom and Redstone's longtime lieutenant, in theory holds the power, but all power needs to be solidified. Redstone's family's true ambitions and side deals are an unknown; his daughter, Shari, is an on-again, off-again heir. Leslie Moonves, the CEO of CBS, is arguably the most successful figure in television with his own daunting power base (and a new deal that takes him through 2019). Strategic preparations among the key principles for a post-Sumner world will break into public view (or at least the rumor mill will work overtime) in 2015. Viacom will advance its hopes to reabsorb CBS, which it once controlled, while CBS, the dominant broadcast business, will try to make a major acquisition to forestall any effort to force a backward fall into Viacom's hands. Meanwhile, the Murdoch family, always partial to back channels, will contemplate a purchase offer that will appeal to the Redstone family.

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3. NETFLIX CROSSES OVER Which side is Netflix really on? Is it digital or is it TV? As digital, Netflix is the prime proxy for an ever-more threatening assault on television's business -- it's the link to the great unbundling. Indeed, Netflix now has become one of the pillars of digital's so-far-undelivered 20-year promise to eat TV's lunch. And yet, in every way but its distribution model, Netflix is in the television business. Except that, alas, its margins are so much lower. On similar earnings, HBO's net operating profit in 2013 was $1.8 billion, while Netflix's was a mere $0.62 billion. This is largely because, in its over-the-top assault, it doesn't have cable companies picking up much of the cost of marketing, billing and service. Hence, in a variation of Hobson's choice, Netflix in 2015 will make a cable deal, perhaps even with its high-speed friend and net-neutrality enemy Comcast, to bundle Netflix in its broadband package -- putting itself, foursquare, into the television business.

4. TELEVISION CROSSES OVER The inchoate notion of television everywhere, the nascent streaming services and complicated partnerships (Hulu) will in 2015 be redefined into the third leg of TV distribution. OTT will join broadcast and cable as part of the basic TV distribution model. Indeed, "premium content," that is, the stuff made by professionals, will be as much the sought-after digital media model as user-generated content (a much-derided form in 2015) used to be. A new debate will begin that increasingly will try to distinguish "TV" the business model from "TV" the distribution channel. This is not mere sophistry, but a fundamental measure of growth (the former grows, the latter shrinks) and dominance (i.e., the Murdochs are seeking to dominate "TV" the business model) that will finally determine how powerful a king content really is.

5. AND FACEBOOK WANTS TO BE TELEVISION, TOO A strikingly noticeable News Feed shift will occur at Facebook in 2015: Your friends' irritating children will surface less often and Facebook's deals with "premium content partners" more so. Despite Zuckerberg's wish for Facebook to be a faceless utility, video will hasten its push into show business. Indeed, Facebook will become a content buyer and licensor. Even bet in 2015 on Facebook doing a major exclusive sports deal, a first for a digital platform. And where is Google? Desperate to catch up, it too will suddenly be a premium content buyer.

Read more Michael Wolff on HBO, CBS Streaming: TV Is Disrupting the Internet

6. COMCAST DEALS NBCU Let's go out on a limb: "TV" the business model will gang up on Comcast the distribution channel to actually threaten the planned Comcast-Time Warner Cable merger. In a compromise with "TV" the business model, Comcast will agree to sell NBCU. The bidders: Google, Amazon and the Murdochs.

7. BOUTIQUE CABLE IS THE FLAVOR OF THE YEAR It started with Time Warner's idea to turn HLN over to Vice and then an even better offer from A&E Networks to provide Vice with one of its lower-performing channels. The fact is that while almost every cable channel used to be profitable, as cable has upped its game and programming costs, that's left the lower-tier of the dial looking considerably lamer. In a world where unbundling could happen, this is troublesome. The solution: Make it someone else's problem. And perhaps it's not a bad solution either. There are many brands in search of channels. Indeed, it may be a way for money-losing big-name websites to luck into a better business model. If Vice finds its niche in cable, BuzzFeed won't be far behind.

8. A NEW NOTION ENTERS THE MEDIA DISCUSSION It's an idea more apocalyptic and transformative than even "digital." It's not just a new competitor, it's a new world -- one as threatening to digital media as to conventional. It is "the end of advertising." Digital has long promised -- and continues to promise -- to undermine television's ad business (once again giddy at this summer's drop in TV advertising numbers). But more exactly, it has undermined the nature of advertising itself. Television, via OTT, is more and more accessible without advertising, while digital CPMs continue to drop almost everywhere (a 30-second pre-roll CPM on YouTube was $9.35 in 2012 and only $7.60 in 2014). What's more, digital has never succeeded in capturing to any meaningful degree big-brand television budgets. All the numbers are going down, so the unthinkable and once unimaginable will become 2015's existential question: What is media without advertising? Indeed.

Hence, a year from now, the TV business will have been redefined, and ever adaptive and more inclusive, there will be, for better or worse, more of it. And despite digital's plans for world conquest, it will still be controlled by TV's largely permanent government, or the next generation of it.

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