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It makes one feel culturally and digitally up-to-date to think that cable and the internet will kill broadcast TV. The issue is pressing at the moment because "upfronts" are here: the period when U.S. broadcasters present autumn line-ups, in the hope of nailing down commitments from advertisers. Given that U.S. broadcast revenues will be $31-billion (U.S.) this year, according to Pivotal Research, big money is at stake.
Cable continues to take market share, as it has for decades. Digital set-top boxes make it easier to skip commercials. Eyeballs are being lost to online video – Netflix, Hulu, YouTube and the like. Further pressure is coming from Aereo, a start-up backed by media magnate and former Fox Broadcasting chief Barry Diller. For a monthly fee, Aereo streams broadcast content collected by well-positioned antennae – one for each subscriber – over the internet, and doesn't pay the broadcasters for the privilege. (It's just renting antennas, Aereo argues.) This threatens the retransmission fees that cable companies pay to carry broadcasters' content.
It is striking, given all this, that broadcast revenues at Disney (ABC Television), Comcast (NBC), CBS Corp (CBS) and News Corp (Fox) are holding up fairly well. Ad sales are down slightly, but retransmission fees and syndication rights are charging along. Ad revenues are not crashing, even as broadcast networks ratings do, because the broadcast audience remains very large in a world of fragmented viewership. And while cable networks may achieve the total viewership levels that the broadcasters do, they don't have nearly the same "reach" – the number of different viewers each program reaches. And reach is what advertisers crave.
The company by far most exposed to broadcast advertising is CBS, with about 60 per cent of revenues from that source, according to Nomura. And its stock performed brilliantly, doubling the returns of the wider market in the past year. Investors, it seems, are still watching the same old stations.