There is something happening in the cable television business that is distressingly familiar to those of us at news media companies.
Viewing audiences are going to streaming services such as Netflix, and, with them, ad dollars are leaving TV for digital.
If you’ve been in the newspaper business for the past decade you know the story all too well. Readers go online, paid subscribership declines, and advertising dollars follow. There has been a seismic shift in the print media landscape.
Cable TV is about to experience this same shift.
Here are four things cable television executives can learn from their newspaper brethren.
- Skip denial.
Imagine you are yourself, today, speaking to a newspaper executive in 2005.
The trajectory is clear.
“Cord cutting is accelerating,” declares the Wall Street Journal. Cable subscribership trends look very similar to the path that newspapers know too well.
Save your breath telling viewers what they should do. Accept the inevitable. Plan for declines.
- Use pricing to your advantage.
This is something news media companies have done consistently well in the past five years. Generally speaking, they have been able to maintain circulation revenues even with declining sales.
It may be harder for cable companies to extract higher rates from subscribers. It is not unusual to have a cable TV package north of US$80 per month. Newspapers are typically in the US$25 to US$50/month range.
Nevertheless, pricing is an effective tool to get more out of a shrinking base. You can assume that the subscribers who have stuck around have a higher willingness to pay. Expect more variable pricing and bundling/unbundling gimmicks to get subscribers to pay more.
- Develop new products.
News media companies are trying valiantly to diversify revenues. All have entered the digital realm, in one manner or another, and all are trying new revenue-generating ventures. Membership models, event management, e-commerce, content services … news media companies are (rightly) testing numerous business models to survive.
Television companies are trying new business models as well. Although not exactly a household name, there has been considerable investment into the “TV everywhere” concept. Rapid advancement into new businesses must continue as cord cutting intensifies.
- Make strategic acquisitions.
News media companies can be an acquisitive lot. Whether seeking new digital opportunities (for example, Axel Springer buying all of Business Insider) or simply consolidating markets (think of the Postmedia-Sun Media deal in Canada), they are buying and merging operations.
Cable is behaving similarly. Although the US$45b Comcast-Time Warner Cable merger fell through earlier this year, cable companies are right to seek big mergers and acquisitions in the near future.
Let print be your crystal ball
For cable television companies the experience of newspapers offers a view to the future.
Readers, viewers, and advertising dollars are going digital.
In terms of advertising spend, MagnaGlobal predicts that digital will become the single biggest media category by 2017.
There is no turning that ship. Better to accept the inevitable and plan for the streaming, digital future.