There’s an incredible diversity represented in the wide landscape of zombie culture. There are zombies with near superhuman qualities as you might see in World War Z. There are zombies that have mythical qualities like the white walkers in Game of Thrones. There are zombies of a comedic nature that you could laugh at in Shaun of the Dead. And then there are the famous walkers of The Walking Dead, who have been zombies for years and are slowly roaming the planet with no point or purpose in mind, just waiting to have their brains blown out to just be put out of their misery.
Cable television is that Walking Dead zombie.
In a span of 24 hours this week, the cable industry lost $15 billion in value. This is higher than the GDP of Madagascar. The cable industry is in such sad shape that its losses are equivalent to wiping the entire economic impact of medium-sized countries off the map.
On Wednesday, Warner Bros. Discovery announced a write-down of $9.1 billion on their balance sheet thanks to the declining business of their cable networks including TNT, TBS, Discovery, and others. The WBD stock tanked in real-time as CEO David Zaslav failed to assuage concerns from shareholders that the media giant can navigate a future that does not include the NBA. After fumbling negotiations and relying on a Hail Mary lawsuit to try to keep hold of the NBA on TNT, WBD is looking at a very bleak future for their cable channels.
A day later, Paramount announced their own write-down of $6 billion for their cable channels in addition to laying off 15% of staff as they prepare to be acquired by Skydance.
The stunning loss of billions of dollars is just confirmation of what has been known for a while now — the cable industry is not only dying before our eyes, it’s already dead.
The only things that are propping up cable at the moment are live sports and cable news as pretty much every entertainment franchise and cable staple can be found on streaming platforms and FAST channels. But even those pillars of the industry are preparing for a future without cable. The juggernaut of cable that is ESPN is readying its own DTC service and bundling its live sports offerings with WBD and Fox to create Venu Sports. The cable news mainstays are planning for the future beyond cable as well.
As the streaming revolution has fully taken hold, the media industry is facing a fork in the road. And, on Yogi Berra’s advice, they are taking it.
On one path is the unlimited nature of streaming platforms that have been embraced by big tech and traditional media companies alike.
While cable lost billions in value this week, Disney’s streaming offerings including Disney+, Hulu, and ESPN+ turned a profit for the first time thanks to a $66 million quarter from ESPN+. It’s a landmark moment that shows that it is possible to forge a profitable future in the streaming era as these companies look to reclaim the billions lost through cable’s collapse.
These streaming platforms are in a race to win subscribers and keep them, which is the competitive foundation of the new era. The streaming industry certainly isn’t immune to challenges whether it be password crackdowns or subscriber churn. But after investing billions of dollars in building them up, they are finally starting to see the light and the future is becoming slightly less cloudy. Ironically, it may even include a re-bundling of sorts as we are already seeing with Venu.
On the other path is the reach of broadcast, over-the-air television that will still be relevant as long as antennas can get signal and viewers need an option that doesn’t depend on creating a Google spreadsheet to sort out how much you are paying for what streaming platform.
These two paths for the future are clearly seen in where sports leagues are heading with their rights deals. The NBA’s huge billion-dollar contracts are the perfect example. Commissioner Adam Silver was signaling this move all along. He built a rights portfolio that emphasized broadcast (NBA Finals on ABC, two nights a week on NBC) and streaming (Amazon and Peacock) and left cable behind. Even though it meant ending a cherished relationship with the NBA on TNT, Silver knew that he did not want to disguise his league as a decaying corpse amid cable’s zombie apocalypse.
It’s the same model that the NFL employs. The league has always been featured heavily on broadcast television with pretty much every major network involved. And now they’ve partnered with almost all of the big tech companies on streaming as Amazon, Google, and Netflix all have a piece of the succulent NFL pie. On a smaller scale, even Roger Penske’s new IndyCar deal chose a lane with Fox featuring every single race on the broadcast network in their new contract.
And local teams are going in the same two-pronged direction. With the RSN industry in flux, as Bally Sports is embroiled in a never-ending bankruptcy drama, teams are taking matters into their own hands. The most prevalent and successful model has seen teams go direct-to-consumer with a streaming option while also airing games locally on over-the-air television.
The numbers don’t lie. At its peak, ESPN had 100 million cable subscriptions. Now the biggest cable networks are in less than 70 million homes and falling rapidly with each passing year. According to Nielsen’s latest numbers, streaming is up to over 40% of viewership, which is the highest number to date. Cable now just holds 27% of viewership, down 3 points from a year ago. Those trends are only going to accelerate as more content diverts to streaming and broadcast television and the snowball effect only builds.
The sports media and entertainment industry will never have the good times of cable again, where monthly fees automatically filled their bank accounts whether people were watching their networks or not. Similarly, the streaming revolution isn’t a paradise for consumers either. Sports fans, entertainment enthusiasts, and news junkies all have to be vigilant in building their own bundles and constantly searching for the best value. But it’s what we all have to live with as we say a long, slow goodbye to cable and watch it stagger off into the wilderness.
