As consumers cut the cord for streaming services there’s a crisis brewing for TV news which should be of concern for anyone who values a well-informed citizenry.
Tom Rogers, the first president of NBC Cable (now executive chairman of Engine Media) lays out the quandary for the TV news business in an op-ed for CNBC.
He says, “While the streaming wars heat up, and legacy television channels lose both viewing audience and subscribers, no one is really focused on what this means for television news.”
That’s because the business model that has underpinned national and local TV news for decades is under serious threat.
For instance, CNN, CNBC, MSNBC, and Fox News are paid “very substantial fees” across every cable and satellite household in the US, as Rogers outlines.
Today, that means subscriber fees are paid to news channels covering over 75 million, households even though only a small minority of households watch each of those channels.
“That creates a very substantial revenue base supporting the big TV news franchises — regardless of how many viewers the channel actually has, it is getting paid across all cable and satellite homes.”
Similarly, local television stations are paid retransmission fees from cable and satellite operators, which are on verge of plateauing and possible decline.
“Any one news channel transitioning to a live streaming service would have to charge a very substantial fee to each home to make up for the cable and satellite carriage it is losing,” Rogers says.
TV news began as public service programming that broadcasters had to carry as a condition of their license from the FCC “but it will soon face an existential crisis as to how to remain so.”
Rogers comes armed with some solutions. One could be a bundle of national and local TV news similar to Apple’s package of magazines and newspapers offered digitally for a monthly $9.99 with Apple News+, “but so far it has been underwhelming in terms of its adoption.”
He thinks Comcast-NBCUniversal (the parent company of CNBC) is in a good position for this, given its broad array of news assets (including MSNBC and Sky News). Another possibility would be to find a more “Switzerland-like player” to act as a neutral distributor.
News channels and stations are all in this predicament together, Rogers says. If they can’t get subs from all cable and satellite households, they’d at least like to get fees from all news households, even those that don’t represent loyal viewership of their particular brand.
Fox’s Fox Nation, for example, is a subscription news channel for the right or right-wing, but Rogers’ guess is that this model is insufficient “to make up for the substantial financial decline the Fox News Channel will suffer with significantly diminished cable/satellite subscriber fee support.”
He doesn’t have any solid answers beyond calling out the threat to democracy of if TV news’ ability to speak to truth to power is allowed to whither.
The problem is exacerbated by the fate of US print news publications.
More than 70 local newsrooms have closed over the past 15 months, with hundreds of media jobs lost, as the already difficult financial conditions in the industry intensified during the crisis. By some estimates, 2,100 local newspapers, or one in four, have closed in the US since 2005.
READ MORE: The coronavirus has closed more than 70 local newsrooms across America. And counting. (Poynter)
Now there’s concern over the ownership of vast swathes of the US newspaper industry. CNBC and The Guardian point out that hedge funds or private equity firms now control half of US daily newspapers, including some of the largest newspaper groups in the country: Tribune Publishing, McClatchy and MediaNews Group.
Tribune (owner of the New York Daily News, the Chicago Tribune and the Baltimore Sun) was taken over in May by Alden Global Capital in a deal worth $630 million.
“Alden Capital and other players in the sector are widely feared by the industry for cutting staff and selling off real estate assets to boost profits,” believes The Guardian.
After deal last month, journalist union NewsGuild, said in a statement that it opposed the transaction on grounds that Alden had “demonstrated a consistent policy of profiting from liquidating rather than building news publishers.”
READ MORE: NewsGuild formally makes the case that Tribune Publishing shareholders should reject Alden’s takeover offer (Poynter)
Columbia Journalism Review has published analysis on the effects of cutbacks in local news production, including the spread of low-cost, online automated story generation that has come to be known as pink slime journalism.
READ MORE: As election looms, a network of mysterious ‘pink slime’ local news outlets nearly triples in size (Columbia Journalism Review)
While COVID has wrecked TV and print news business finances, the rollback of state support for independent news is threatened on the other side of the pond.
In the UK, ad funded public service broadcaster Channel 4 is being considered for sale by the government as early as next year. Channel 4 runs a highly regarded news program which is often a thorn in the side of the government. It is produced by ITN, which also produces news for ITV and ViacomCBS owned commercial Channel 5 (ViacomCBS is considered a potential buyer for Channel 4).
A sale might net the government around $1.3 billion, but any further consolidation, especially in private ownership, would likely squeeze news budgets further and potentially weaken editorial agendas.