This article appears in the August 2024 issue of The American Prospect magazine. Subscribe here.
There were so many CNN logos on the set of the June presidential debate between Joe Biden and Donald Trump that it became a running joke. This was the first general-election debate produced by a single television network since 1960, and CNN, whose numbers had sagged to the point of irrelevancy, was going to milk it for all it’s worth. CNN’s moderators would ask the questions, and the logo would appear everywhere, even on rival channels simulcasting the program. The network added an unprecedented two commercial breaks and sought millions of dollars from advertisers.
In the end, ratings revealed the smallest audience for a general-election debate since 2004, and of the estimated 51.27 million viewers across 16 channels, fewer than 1 in 5 watched it on CNN. Part of this was due to the June airdate, months before Election Day. But CNN took solace from the fact that Nielsen ratings only register broadcast and cable channels, not its burgeoning digital platforms. Indeed, they said, this was the largest-ever audience for CNN on Max, the streaming network owned by parent company Warner Bros. Discovery. But that was a low bar; the digital audience for WBD platforms was 2.5 million, and for Max, only 864,000.
The numbers exemplify a confusing moment for the television business. Broadcast and cable, the mainstays for decades, have diminishing audiences. Cable is mostly a rerun machine, except for the news channels like CNN, MSNBC, and Fox, which have older, dwindling viewership. Entertainment conglomerates have placed their bets on streaming, a production and distribution system they control. But so far, streaming hasn’t made any money, and likely won’t until it looks more like cable, with a single payment for maximum access.
The streamers are making their final assault on the current system, bidding up sports broadcasting rights and experimenting with bundling. If the formula ever gets perfected, it’s the end of cable as we know it. That clouds the future for one type of programming in particular: news, which streaming networks currently have no obligation or seeming interest to produce.
Streaming hasn’t made money, and likely won’t until it looks more like cable, with a single payment for maximum access.
Given the distorting influence of cable news on our politics, that might be a great thing. But recent history demonstrates that, whatever you think of our old news structures, what rises to replace them can always be more corrupting. And with most Americans today receiving local broadcast channels through their cable box, trading a cable bundle for a streaming bundle might leave networks and local affiliates behind, too, further dehumidifying news deserts that have popped up as local newspapers die out.
There are policy options to fix this, the same ones placed on the cable industry in its infancy. But nobody seems to be considering these issues; we’re rolling into the streaming age mostly with nonchalance.
More than anything, the potential fall of cable—and with it the transformation of broadcast and local channels that have been in operation since 1928—creates a giant dose of uncertainty. As Doug Creutz, a television industry analyst with TD Cowen, told me: “I don’t know that I’d call it a hinge point so much as a gray zone.”
AS RECENTLY AS TEN YEARS AGO, 100 million households in the U.S. paid for a cable TV connection. Last year, it fell to about 72 million. And the first quarter of 2024 saw the biggest exodus from pay TV, which includes live digital channels like YouTube TV and Hulu Live, since the start of the cord-cutting era. Analysts estimate pay TV will fall to 47.8 million households by 2027. Last year, only six of the top 70 cable networks gained audience, and broadcast and cable pulled in less than half of Americans’ viewing time for the first time in television history.
By contrast, 99 percent of all U.S. households now pay for a streaming service. And YouTube was responsible for more viewing time on television than the entire broadcast and cable slate of NBCUniversal, or Paramount/CBS, or Warner Bros. Discovery. “Digital video is the future of video and streaming companies are well-positioned to capture more advertising dollars,” said David Cohen, CEO of the Interactive Advertising Bureau trade group.
The damage to cable is self-perpetuating. Advertisers have already sharply reduced broadcast and cable ad budgets, while increasing digital budgets more than tenfold. Fewer cable subscribers reduces ad rates more, along with lower revenue from “carriage” fees that cable companies pay to air channels. This leads networks to cut costs further, making the product less compelling and giving people more reasons to cancel. This is what the end of a business life cycle looks like.
Prestige cable shows like “The Bear” don’t even air on cable; it streamed exclusively on Hulu.
It is a truly bizarre experience to watch cable TV now. Comedy Central airs only one original show, and two years ago WBD ended all scripted programming on TNT, TBS, and TruTV. Networks like USA, A&E, Lifetime, and countless others, regardless of their original branding, have been hollowed out, almost uniformly running old TV shows and movies, with the occasional cheaply produced reality show sprinkled in. Even once-bankable regional sports networks are slowly dying, unable to recoup the cost of airing sports from diminishing audiences.
Because parent companies have made up for financial losses by licensing their catalog to streaming channels, cable’s main competition is being constantly enriched. FX, which had a run of hit original shows over the past decade, spent months hyping Emmy-winning dramedy The Bear and docuseries Clipped, only for them both to appear exclusively on Hulu.
One company personifies the death of cable: Paramount, owner of a giant cable library (Comedy Central, MTV, VH1, Logo, Nickelodeon, TV Land, BET, Showtime) and the top broadcast network, CBS. A decade ago, that would have been a lucrative portfolio. Today, it’s more like owning a series of oil rigs after the world has switched to clean energy. Paramount has been in sale talks all year, swinging in and out of a deal with production company Skydance on three separate occasions. (At press time, the deal appears to be back on.) In the meantime, the CEO left and the company started slashing costs everywhere, including taking down the MTV and Comedy Central online archives, putting decades of beloved programming out of reach. And BET is reportedly for sale.
Paramount has a weird stock structure where controlling shareholder Shari Redstone owns 77 percent of voting stock but less than 10 percent of the company itself. But the bigger problem is that the company’s value keeps falling. “The stock market doesn’t hate losing money, it hates when your business is declining,” explained the anonymous analyst who runs the website Entertainment Strategy Guy.
Just one thing stands in the way of cable’s complete dissolution: Streaming media is a bad business.
THE FIRST WAVE OF STREAMERS MAINLY sought to grab eyeballs; Netflix even gave their DVD-rental customers free access when it started streaming in 2007. People loved paying a few bucks a month for big libraries of content without ads. But once Netflix got into the original-programming game with House of Cards in 2013, studios engaged in costly bidding wars against each other, with deep-pocketed tech giants like Amazon and Apple distorting the market further. They all essentially punched each other out, losing billions in the process. “Netflix was offering a product below market price and people wanted to join that,” said Entertainment Strategy Guy. “That does not make for a great industry.”
Disney+ has lost $11 billion since launch. Peacock, Paramount+, and Max all lost money in 2022. While Netflix is profitable, after the company announced its first-ever decline in active subscribers in April 2022, shares fell by 35 percent; the company’s stock is just now getting back to where it was in late 2021.
Trying to turn a profit now means degrading the product. Practically every streaming company has raised prices, making subscriptions no longer a great deal. Companies are introducing ad tiers and increasing interruptions to programming. Moguls like Disney’s Bob Iger are openly admitting that they invested too much in streaming; layoffs and cost-cutting have become commonplace. And original programming has peaked in frequency. That sapped the value from streaming and angered customers.
Traditional broadcast/cable setups maintain three distinct advantages over streaming: sports, news, and “lean-back” TV, with programs running on a set schedule rather than viewers having to actively choose. But the real three advantages are sports, sports, and sports. Of the top 100 rated shows on television last year, 93 were NFL football games, three were college football, and one was the show that aired right after the Super Bowl.
96 of the top 100 programs on broadcast and cable were football games.
That’s why streamers are diving so aggressively into sports, which have long, built-in ad breaks and can finally create the tipping point for cord-cutting. Amazon has designs on becoming the streaming sports leader, with Thursday night NFL, NASCAR, and now the NBA, through a new contract worth around $1.8 billion per year that steals men’s basketball from Warner Bros. Discovery. Apple TV+ has a baseball package, and this year Netflix struck a three-season deal for NFL games on Christmas. Last year, NBC moved a Chiefs-Dolphins playoff game to its Peacock service, creating the largest streaming audience in history. YouTube TV now hosts NFL Sunday Ticket, the hardcore fan package of all league games.
None of this has thrilled sports fans, who would have to shell out more than $800 to see every NFL game this year. They resent the one-off subscriptions and constant jumble of finding their favorite team. But help is on the way. A class action antitrust lawsuit against the NFL for colluding to raise the price of Sunday Ticket when it was on DirecTV resulted in a $4.7 billion verdict and could pave the way for single-team streaming services, which would give superfans no reason to turn back to cable, and destroy an emerging broadcast play for local sports.
Meanwhile, Disney, Fox, and Warner Bros. Discovery have teamed up for a sports-only streaming network called Venu Sports that will show all sports programming from its families of networks, which includes ESPN. This was more impressive when Warner Bros. Discovery had basketball, but it still would carry nearly all hockey and baseball broadcasts and more than half of all sports contests overall.
That points toward a recognition that streaming must consolidate or bundle to survive. Always having something to watch across an array of streaming channels helps solve the problem of users subscribing, blasting through the most popular programs, and canceling, a phenomenon known as churn. There are potential antitrust concerns if companies that control both production and distribution make exclusive deals with one another; FuboTV, which offers live sports and local channels, has already sued Venu Sports. But a third party could step in to sell the bundle, essentially reinventing the cable business, which was relatively profitable for all parties.
Creutz says this would be better for viewers, too. “When you’re in a bundle with a lot of people and splitting revenue up, you can take more risks on programming,” he said. “If on your own, you have to speak to most people. Would Mad Men or Breaking Bad be greenlit by a streamer now?”
Disney+, Hulu, and Max are about to offer a bundle; Comcast already offers a bundle of Peacock, Netflix, and Apple TV+ in a package called StreamSaver. During contract negotiations last year, Charter asked Disney to bundle its streaming services along with linear TV channels at the same carriage fee rate. Disney mostly relented in the settlement, giving Charter an ad-supported version of Disney+ and ESPN+ for more premium subscribers. Add these options to Venu Sports and free ad-supported streaming television (FAST) channels like Tubi and Pluto, and you’ve covered the vast majority of what’s on TV, at a comparable if not lower price than cable.
YOU DON’T HAVE TO HIT ZERO CABLE subscribers for cable to cease to be a functional business. At some point, providers will determine that the costs of maintaining cable exceed the revenue coming in, and focus on other ways to make money. This spring, Consolidated Communications, whose revenue mostly comes from broadband, dropped cable entirely. “The video ecosystem is broken,” Chris Winfrey, CEO of cable giant Charter Communications, told investors last year.
In cable’s place, we can expect an entertainment and sports bundle. Generating “appointment” viewing at a particular time, like Netflix’s successful experiment this spring with the live roast of Tom Brady, could become more prevalent. But what we haven’t seen is a news bundle. And in a world where partisan tribes match with their partisan news sources, there’s no value in a bundle. “People don’t want to watch MSNBC and Fox News, like baseball and football, or pro and college sports,” said Courtney Radsch, director of the Center for Journalism and Liberty at the Open Markets Institute.
The highest-profile attempt to create a streaming news channel, CNN+, failed so utterly, lasting just one month with fewer than 10,000 viewers at any one time, that there’s little appetite to try again. Cohen, of the Interactive Advertising Bureau, insists that “there is a significant amount of news content that can be accessed via streaming platforms. While it may not have the same mass appeal as sports or entertainment, it is definitely part of the streaming landscape.” Indeed, CNN programming has been folded into Max, the way NBC News is available on Peacock and CBS News on Paramount+. ABC News is scheduled to create programming for Disney streamers. But little of it produces original programming rather than nightly news rebroadcasts, and CNN’s streaming debate audience shows that it doesn’t interest audiences.
Fox Nation, the subscription service of Fox News, is a good example. It has been a very modest success, with two million subscribers. (Netflix has nearly 250 million.) But the streaming version of Fox is drifting decidedly away from news, adding lifestyle programming from Hollywood stars like Kevin Costner, Matthew McConaughey, and Martin Scorsese.
Broadcasters are required by license to maintain news operations; as streaming channels, they aren’t.
I am hardly pining for the possible loss of cable news, given its mostly negative impact on political discourse. Anyway, cable news has a relatively small audience, and making it less visible really only lowers the notorious amplifying effect rather than the access. But there’s more to consider here.
After a cable collapse, the major broadcast channels will likely not hope that the world rediscovers antennas. Only about 12 percent of all households watch television over the air without cable, according to Nielsen. Creutz says he’s talked to broadcast executives, who have told him they are willing to convert to streaming if necessary to preserve the networks. Many sports contracts are tied to free over-the-air viewing, but that’s already being chipped away and can be renegotiated.
Meanwhile, broadcasters are required by license to maintain news operations; as streaming channels, they would be less accountable to the public interest. “Let’s say CBS decides tomorrow they’d be better off as a streaming channel,” Creutz suggested. “Would they keep their news organization? I don’t know. None of these guys make money off their news … Walter Cronkite ain’t coming back.”
Broadcast abandonment of linear TV would also likely swallow up local channels, which would have too small a footprint on over-the-air television to stay in business. What do local stations primarily produce? Local news.
Two hundred counties in America lack a local newspaper. Television remains a large source for news consumers, particularly those over 50, and local news viewership has been relatively stable. What happens if those channels go away? “It further underscores why you have to look at market dynamics with the news industry,” said Radsch. “It’s already not very profitable to run a news outlet on cable or broadcast. That’s going to become a broader problem.”
Maybe you can replace the cable news talking head wasteland with opinion-heavy streaming and YouTube content. But the substitute for local news in particular is hard to find. Putting heavier blinders on what happens in our communities would be a nightmare. And democracy demands a variety of news and information available to people wherever they can be reached.
The way America solved this during the move to pay TV was through must-carry requirements put in place in the 1960s. Local channels can demand carriage on cable systems, and cable operators must pay them to transmit their broadcasts, while setting aside space for local programming. A must-carry mandate doesn’t exist in streaming, but that doesn’t mean Congress or the Federal Communications Commission (FCC) cannot create it. Local streaming channels could become required on smart TV sets or as part of streaming bundles, as well as retransmission fees.
It may require a new Telecommunications Act to reimagine local programming in the streaming age. Radsch thinks policymakers need to start exploring it. “I don’t think policymakers are either addressing the current challenges adequately nor are they looking to the history of governing our information communication technology,” she said. “We’ve got to get on top of this faster and not wait two decades in.”
