Once upon a time, there was a cute group of TV networks housed in a lovely building on Wilshire Ave. in Los Angeles that belonged to a very large cable company from Philadelphia. In this low-slung, red granite edifice was a trio of little cable nets that, when combined, became what was known as “CEG” or Comcast Entertainment Group. I know this because I have this coffee mug. Yes, they gave me this mug. Yes, I would have stolen it if they hadn’t, but people were friendly back then in L.A. I am proud to use it for hot chocolate and the occasional bisque, but never for anything like stew because that would be weird.
CEG was composed of G4, a gaming-focused channel, E! Entertainment, which helped to pioneer the celebrity-fueled reality trend that caught fire in the early 2000s, and the E! spinoff Style Network, which in theory was supposed to capture the fashion and culture end of entertainment coverage. At the same time, E! focused on providing incredibly deep and thoughtful profiles of TV and film personalities. If you just threw up a little in your mouth, you’re my kind of person.
My golly, how times have changed. Soon after this mug was fired in the kiln of kindness, the good folks at Comcast went hog wild and bought NBC Universal from the ghost of Jack Welch, or at least from the zombie of a company he left behind in G.E. At this juncture, the senior founder of said cable company declared “our content strategy is now complete.” This had to sting a bit for the nice folks in L.A. just plodding along with their cute, harmless, lightly profitable cable networks. I mean, if your parent company declared that some other networks “completed them,” you would feel pretty unappreciated, wouldn’t you?
So now the cable kings had a stable worthy of their empire. And that stable was full of cable networks and, like any actual stable, quite a bit of horse shit. How do we know this? Because this year, it seems like the Media Masters of the Universe are finally admitting that all of these cable networks add up to a hill of beans, and the bean counters are letting us know what they are worth. The brain trust and Discovery/Warner Brothers just wrote down the value of their cable properties by $6 Billion, which includes family and advertiser favorites like Animal Planet, Food Network, and any network acronym that starts with “T” like TNT, TBS, and TruTV. This comes on the heels of Paramount writing down the value of their cable networks like MTV and Comedy Central by $9 Billion. So suddenly, in 2024, there’s $15 Billion in cable network value that just melted away like ice cream in July.
Enter Comcast yesterday, officially announcing that they would spin off these cable network assets into another company to get this manure out of their barn. But it’s not a write-down. Instead, they are going to equip this stalking horse with a bunch of those ill-performing NBCU cable nets, minus Bravo (which ironically was created by Warner Networks back in the day…), to go out and act as the aggregator/acquirer of all of these other unwanted cable programming assets. Now, mind you, this company lost $436 Million on Peacock during the 90 days, including the Paris Olympic Games. Total Peacock losses for the year will approach $2 Billion.
So, keeping with the holiday spirit, it seems like there will be an Island of Misfit Toys where all unwanted cable nets can feel valuable, important, and capable of whatever they imagine. “C’mon, kids, let’s put on a show”!. Let’s just remember exactly what kind of toys these were: a cowboy riding an ostrich, a plane that doesn’t fly, a boat that sinks, and a square-wheeled train. All of these are excellent metaphors for what may become a menagerie of abandoned video entertainment channels that used to command real affiliate revenue from cable companies that would pass that cost on to unsuspecting customers who never watched these channels in the first place.
There was an analysis done by one cable company during a fee negotiation that demonstrated that one channel that was being stuffed down their throat in the bundle the programmer was offering was so unwatched that every subscriber who was watching that channel was being subsidized in the amount of $1500 per month by all of the other cable subscribers. And you thought sports networks were getting away with murder.
So, let’s follow this logic to its ultimate conclusion.
If all of these media mega-corps throw off their distressed programming vehicles into a single gelatinous pool of video owned by a new publicly traded entity, does anyone really believe that the content will improve? Of course not! This is the Troubled Asset Relief Program of content, where too-greedy-to-fail old-line TV executives can cast off their bad decisions, like Wall Street. And just like after the most recent financial crisis, when a lot of promises were made to strengthen the smaller and mid-sized institutions to prevent the excessive concentration of capital and risk that made the whole system seize up last time around, there will be similar promises made to improve the fortunes of niche upstart AVOD and FAST networks by the very same folks who MBA’d their way into this mess.
TSM has a better idea: let ‘em drown.
Don’t even try to throw them a lifeline. It’s a waste of twine. To create a NewCo premised on providing palliative care to dying cable channels is idiocy. Instead, allow the cable bundle to shrink to a manageable size so it can be as self-sustaining as possible while keeping an eye on the new generation of programmers already building successful franchises on digital platforms and then buying those programmers based on their merits as a business. As viewing habits continue to shift and adjust to an always-on world, investing in dedicated programming by genre or trying to capture specific audience demographic segments may not be an adequate strategy moving forward. Instead, the content (and now streaming) industry may better serve its multiple distribution affiliates by producing stories and characters that can stand alone as episodic entertainment in a video playlist, regardless of the name of the network that made it. It’s possible that we’re witnessing the end of the network format with a whimper, not a bang.
The views and opinions expressed by The Streaming Madman are entirely his own and do not necessarily reflect the views of The Streaming Wars or its affiliates.
