Streaming Shift Fuels Uncertainty in TV News Industry

Broadcast and cable news outlets are grappling to secure a stable position in the streaming era as the media industry braces for an accelerating shift away from linear television. Major media conglomerates like Warner Bros. Discovery, Comcast, Disney, and Paramount have largely been unable to achieve lasting profitability in the streaming domain. This struggle is compounded by declining advertising revenues for broadcast TV and a widespread trend of cord-cutting.

Experts and industry observers suggest that younger audiences are increasingly consuming news through social media platforms. These demographics are generally more inclined than their older counterparts to use streaming services for entertainment and sports content. Despite a somewhat optimistic outlook from some industry insiders on the future of traditional television advertising, significant TV news companies appear to be gradually venturing further into the realm of streaming.

“Streaming is a technology, not a business model,” remarked Michael Biard, a former Fox Corp. executive and current COO of Nexstar Media Group, the largest provider of broadcast news in the U.S. Nexstar also owns The Hill. Biard emphasized that news consumers typically prefer accessing multiple sources, hinting that the future of television news might involve bundled services offering a variety of news outlets.

Over the past few decades, cable packages have been a major revenue stream for media companies, driving substantial political influence and advertising revenue around cable news. During Donald Trump’s initial presidential run and tenure, cable news ratings soared, with approximately 70 percent of TV households subscribing to cable or satellite services. However, cord-cutting began during Trump’s presidency and has intensified since, reducing the subscription rate to below 40 percent today.

Warner Bros. Discovery, the parent company of CNN, plans to launch a new 24-hour paid streaming news service this fall, which will be available on Max. This follows the closure of its first attempt at subscriber-based streaming news in 2022, which incurred a loss exceeding $300 million due to lack of consumer traction.

While Fox News and MSNBC require cable subscriptions for online streaming through third-party apps, they have yet to introduce direct-to-consumer streaming news apps. On the other hand, Comcast’s NBC and Paramount’s CBS have ventured into free ad-supported streaming news and are planning further expansions in this space. Notably, Netflix, the most profitable streaming service, does not offer any live news content.

Biard noted that Nexstar, which operates the cable news channel NewsNation, has no imminent plans to launch a direct-to-consumer streaming app for national news. The extent of investment in streamed news remains a debated topic among news companies.

Complicating the scenario for news providers is the entry of Big Tech into the media landscape. Major investments by tech giants like Amazon and Apple in streamed sports and entertainment have created intense pressure on legacy brands to compete for audience share and advertising revenue. Observers predict that this trend could lead to more mergers and acquisitions among traditional media companies.

How news content will fare in this evolving environment, and whether it can turn a profit on streaming platforms, remains uncertain. Patrick Ferrucci, an associate professor of journalism at the University of Colorado Boulder, noted, “Consolidation in media has not always been beneficial for journalism historically.” He added that the current cable and network news structures might not offer long-term returns on investment for large media companies.

Should tech companies like Google, Amazon, and Apple expand further into the news business, they might not only pose financial challenges for legacy broadcasters but also raise significant questions about objectivity and editorial control.

Anthony Adornato, an associate professor of broadcast and digital journalism at Syracuse University, suggested, “It’s inevitable that more tech giants will want to enter the news business. They already control much of the information the public consumes, presenting a real opportunity for them to leverage their existing influence.”

Experts argue that, similar to live sports and entertainment, news broadcasters will need to keep subscription costs low to entice consumers to stream their news rather than turning to social media platforms like TikTok for coverage and commentary. A recent Deloitte study found that the average U.S. household spends just over $60 monthly on four streaming services. The same study revealed that most Americans under 50 obtain their news from social media and online influencers.

The lack of disclosed streaming numbers by major news brands adds to the uncertainty about the long-term sustainability of the technology. Mi-Ai Parrish, a media innovation professor at Arizona State University’s Walter Cronkite School, observed, “While the demand for news content remains, the challenge lies in determining how to monetize it.” Tech companies in the news space exacerbate this issue significantly.

Despite divided opinions on the imminent demise of linear news channels, there is broad consensus that consumer habits are evolving rapidly. As a result, how broadcasters transition their audiences to streaming and maintain their influence is one of the industry’s most pressing questions.

Alan Wolk, a media advisor and critic, commented in a recent blog post that traditional TV news might not resemble the cable news ecosystem of the past three decades, which heavily relied on Nielsen ratings.

Source: The Hill, The Washington Post