The New York Times took two recent events, the talks of GE spinning off NBC and the planned move by Oprah Winfrey from broadcast to cable, as possible evidence that cable is taking over as the dominant visual medium.
The biggest problem for the networks, according to NYT, is their almost total reliance on advertising for revenue. Cable competitors have a much more stable income source – subscriber fees. They are also operating with far superior profit margins. They are increasingly able to acquire or produce excellent programming at the same time the networks are experimenting with cheaper fare, chiefly seen in the replacement of scripted programming with reality programming.
The ultimate experiment in progress is NBC’s placement of Jay Leno in primetime, and according to NYT, there is speculation that the speed bumps that move is running into may have been the final straw in the apparent decision of parent General Electric to exit the programming business entirely.
The success of Oprah is of course undeniable, and the fact that she is seeing cable as the greener pasture is seen as even more evidence that the television model is broken beyond repair.
RBR-TVBR observation: It’s easy to see why speculation favors cable over broadcast, but the future does not have to be that way. The broadcast networks retain a big advantage over cable programmers – even though audiences have eroded, they still dwarf those of an average basic cable offering. And that has value to advertisers.
Just as individual broadcast stations have to defend their primary advantage, local service; the networks must maintain their unique and special talent – the ability to bring a large group of people to the same channel at the same time, to provide advertisers the kind of big bang they can get from no other medium.