THB Headline, August 31

I’ve been wrestling with trying to explain why Joe Flint’s story of last week is so important. It’s right up there with Netflix adding advertising… putting the entire streaming segment into the ad business, each seeking their own best methodology.

The transition that all the companies with streamers that also have significant revenue coming in from legacy media is centered on the challenge of balancing the ongoing ability to earn from those legacy media outlets and the immediate revenue and potential revenue in each of the next 5 years of streaming earnings.

Wow. That is still too complicated. And it’s not even the new news. It’s the old news, really.

Trying again…

Comcast is the most conflicted Legacy media company in this transition to streaming. They have a broadcast network, an actual cable company, amusement parks, and a streamer. They have been in the game, but not fully committed. But they seem to be in the midst of a change of strategies.

Their NBC and Bravo content will soon all go from broadcast/cable to Peacock, instead of to Hulu. They are doing a big discounting program (deeper than HBO Max) for new Peacock Premium sign-ups. They have a classic soap opera, Days of Our Lives, that will be airing on Peacock only. They are heavily invested in European futbol. It seems they are moving towards edgier shows produced specifically for the streamer. NBC just added Big 10 Football at a steep price, which includes 8 games exclusively on Peacock. And their Pay-One deal with sibling Universal is getting its first big muscle flex with Jurassic World Dominion.

In addition, the aforementioned Days of Our Lives has filled an hour of daytime, 5 days a week… will it be replaced with NBC programming or is that time also going back to affiliates? Likely. And no one is even talking about that. Another 5 hours a week.

Dumping NBC’s 10p hour of programming (hasn’t happened yet, I must continue to remind) is the most gangster move of all. Yes, there is cost cutting involved. But what it also says is that Comcast thinks it can make a bigger return using that $10 million - $15 million a week/$300 million a year in some other way than selling ads on NBC at 10p.

And if it can make more money with that investment, removing 7 hours of 22 hours a week of primetime (and maybe 5 hours of daytime… and 30 minutes of late night so far), it portends that Comcast not only sees the trend coming, but is willing to be the renegade that really rips off the band-aid and makes the move that will eventually end broadcast TV as we know it.

This is not how the industry sees Comcast.

NBC affiliates may or may not like this idea. How they handle The Tonight Show, no longer fitting in its classic berth if NBC does this, is a giant question mark for both sides. But there is also a specific bottom line, as this move would literally lead to affiliates giving less money to the network. That’s a serious choice.

NBC will argue that affiliates can make more money programming 10p themselves… probably moving news 30 minutes earlier and either going with The Tonight Show at 10:30p or expanding to an hour before The Tonight Show with an 11p start time.

NBC will further argue that the value of NBC Sports, NBC News (including the 4.5 hour long Today franchise), remains as important to affiliates as the 10p hour.

Will Seth Meyers go to Peacock? NBC recently gave back the 1:30a-2:00a/2:30a half-hour that it hung onto for 2 decades. How is Seth Meyers’s show doing financially? Would his consistently Emmy-nominated show make Peacock more of a must-subscribe for “the smart set?”

Traditionally, late night and morning are the cash cows of broadcast networks in the last 40 years or so. Low expense, long broadcast time, drawing audiences pretty much 52 weeks a year, reruns or fresh shows. The Tonight Show isn’t going anywhere… except to a different time slot. But Late Night…

This choice is not, as the New York Times described it, “If NBC forfeited the hour, it would be a largely symbolic yet significant change to the American television landscape.” This just isn’t true. Not just symbolic. It would be an earthquake, because it is the first.

(Disney is moving Dancing With The Stars to D+… but one show is not equivalent to giving back 7 hours of primetime every week.)

I also disagree with the NYT narrative that the move would “reflect the declining influence and viewership totals for the major broadcast networks as streaming entertainment has become ascendant.”

It’s money that matters. Money. Bean counters pushing numbers through graters for days and weeks and months and maybe even years. Influence is bullshit. Viewership totals are only as important as how they translate to ads and how ads translate to cash money.

In the life of a TV series in 2022, with streamers moving toward an ad-dominant future, how much can a $2 million (or more) weekly investment in an hour of programming earn on a network vs on a stream?

The issue of how valuable appointment television is to viewers is still being adjudicated every single day. I believe the answer will be “different strokes for different folks.” But we will see.

Very few individual series are going to contribute clearly to churn avoidance. But as a group (a bundle, if you will), there is power. This is part of the measurement.

What this story says to me is that the most conservative, least aggressive player in streaming is not only throwing down the gauntlet, not accepting conventional wisdom that Peacock is a loser and cannot play with the big kids… but they are now prepared to burn the village down to save the village. (Or at least one street on the backlot and we’ll see what happens.)

And I have bad news for everyone who spends all day trying to think of ways to rhyme “Zaslav” with “fucking idiot.“ This is what Warner Bros Discovery is doing too. They both may survive. They both may die (or be sold). They both may thrive. They are both trying to find answers in the market where they currently make their money - US/Canada - before chasing the bigger revenue stream - international - in earnest.

The future is split at this level - as most content is - between “too big to fail” and “execution dependent.” Of course things can be screwed up disastrously. But media companies this size, that have assets this in demand, don ‘t tend to fall off the earth. And merger & acquisition does not, in my opinion, change the picture for any of theM at this point.

Disney’s $50 billion in debt and WBD’s $30 billion in debt are both absolutely real and offer real challenges. Challenges - again, obviously - can be overcome or not. And the choices in light of disappointment can shock and surprise… which WBD is kinda the definition of these days. This deal - which hasn’t changed materially since Zaslav took over - was not what anyone was expecting when it was announced.

I am hearing Comcast saying, “Those first 2 years… not so much… but we are going to be the first broadcast network to really dive into streaming and that means that 50 years of experience with audiences and advertisers is coming to get you. The Streaming Purge is coming and we are going to be the aggressors, not the ones hiding in our houses waiting for it to be over.”

And a phalanx of consultants and former employees will tell you that Comcast just isn’t that kind of company and it will all fade and turn into mush and that they have to acquire another media company to survive or spin something off or pick a strategy that makes the theorizer of the moment comfy.

It’s always a better bet to be negative. Except when you turn out to be wrong. Happens every day in this town.

Did I mention that the affiliates are likely to be completely restructured as this transition continues? Putting the FCC aside (no minor thing, but can’t really argue their future position here and now), streaming will, eventually, make network affiliates completely irrelevant from the perspective of their historic role.

Even in a streaming-dominant, nationalized network circumstance, there will be the potential of new and still revenue-producing roles for affiliates. Not what we are used to at all. But, I think those ideas are another column for another day.

Comcast hasn’t even made the decision to proceed. But even the idea of making this seminal change from the long history of broadcast television is as significant a spark as is imaginable.

We are a long way from a blazing fire. But the fire must come. Cable must fall. The affiliate system as we have known it must fall. The lessons of streaming competitive infancy - which we are now in - must be learned… and there is no easy route.

There are so many reasons why Legacy media will uphold what they have for as long as it makes financial sense. The streaming-spend shake-out hasn’t really happened yet. Most of these entities are years away from profitability. Even in streaming, there are a movement towards the familiar with FAST and AVOD services doing, in terms of ads, a digital version of what has been done in broadcast and cable for decades.

But the genie is out of the bottle. Every asset is up for reconsideration. Fortune will favor the bold. But it will also be there for the knowingly cautious.

It’s time for a rethink. And Comcast seems to be there, less dragged (like Netflix) than willing. And we can suddenly imagine digital content worlds in whole new ways than we did just months ago, when it seemed like the feet would never stop dragging.

Until tomorrow…