Time Warner Promises To Adapt To Cord Cutting With Fewer TV Ads, Gets Punished By Wall Street For It

from the (re)volution dept

So far the cable and broadcast industry has had a three pronged approach to the threat of cord cutting and the rise of Internet video. One, remain in stark denial about the changes in its sector, refusing anything more than the most superficial evolution (and if anybody notices, just use the word innovation a lot). Two, a relentless dedication to annoying its customers further at every turn, whether that's blocking ad skipping technology or inserting more ads than ever into every viewing hour. And three, a total refusal to ever, ever compete on price. Ingenious, right?

So it was interesting to see Time Warner admit last week that the company would need to make some changes if it hoped to appeal to younger generations, for many of whom traditional cable is a utterly foreign concept. According to Time Warner, the company says it's actually going to limit the number of ads shown on some of its networks:

"Time Warner’s TruTV is testing a new advertising model: It wants to charge sponsors more money by running fewer commercials. Starting in the fourth quarter of 2016, the network, which is devoted to comedic reality programming, will fill less of its time with advertising and promos and more of its air with actual programming. In all, TruTV should run just 10 minutes to 11 minutes of national commercials and promos, compared to 18 minutes to 19 minutes at present..As a result, episodes of shows that air under the new model could run as long as 25 minutes.

“We have a generation that has grown up with access to content that does not have commercials,” said Chris Linn, president and head of programming at TruTV, in an interview. “In order for us to remain relevant to them, we have to deliver the most premium experience possible.”

And while that's only half the battle, it's at least a step forward for an industry that's been comically in denial. Time Warner basically admitted the company needed to address the quality of its product and the delivery of it, accept that the existing TV cash cow is not immortal, and push harder into online streaming. But after Time Warner CEO Jeff Bewkes made the mistake of admitting this on the company's earnings conference call last week, near-sighted Wall Street was sent into absolute hysterics:

"Media stocks faltered during Time Warner's call with analysts to discuss its third-quarter earnings. Chief Executive Jeff Bewkes said his company -- which owns HBO, CNN, TBS, TNT and Warner Bros. -- expects adjusted earnings of about $5.25 a share next year, well below the $5.60 a share forecast by analysts.

One reason for the lower earnings, Bewkes said, was because the company is investing more in new programming for its streaming service, HBO Now, and other digital initiatives. He cited HBO's recent deals with Jon Stewart and "Sesame Street" as well as Turner Broadcasting System's plans to launch a new digital studio, Super Deluxe.

The problem is that offering a better experience is only half the battle. In the face of inexpensive streaming and skinny bundles, the cable and broadcast industry is also going to have to compete on price, something that cable operators and broadcasters alike have treated like the Bubonic plague. So far the cable industry hasn't quite realized that its precious cash cow is dead and current profits are unsustainable. And those that do have this revelation (and begin the much-needed process of adaptation) are punished by Wall Street's total and often painful obsession with the six inches in front of its collective nose.

Filed Under: competition, cord cutting, tv, tv ads, wall street
Companies: time warner cable

TV Networks Sued For Hiding Who's Buying Political Ads

from the a-little-sunlight,-please dept

The money in politics issue is one that gets a lot of attention and the good folks over at the Sunlight Foundation have been trying to help provide much more transparency for years. And now they're bringing out the lawyers. Teaming up with the Campaign Legal Center and represented by Georgetown University's Institute for Public Representation, the Sunlight Foundation has filed complaints against 11 TV stations for blatantly violating the Bipartisan Campaign Reform Act, which requires networks disclose who is actually buying political ads on TV.

Political nonprofits, which often come with singularly uninformative names like "American Action Network" or "Patriot Majority USA," are not required to disclose much of their spending — or any of their donors — to the FEC. But there is one place where they do have to leave a paper trail: the TV stations where they buy ads. That's why we put our focus there.

Just one problem: a bunch of TV networks have basically done everything possible to avoid complying. Even though courts have said that the major TV stations need to post very specific information online, many simply don't include the necessary (and required) information.

Why is it important? Because "Americans for Better Apple Pie" might be your local slag heap operator. "Citizens for a Conservative GOP" might be Democrats trying to sabotage the primary contender that they think has the best chance of beating their candidate in the general. These are not far-fetched scenarios. Take a look at this ad, which doesn't anywhere mention toxic materials, but which paint an indubitably positive picture of the chairman of the House committee that's now working on a rewrite of the government law on toxic waste. Unless you are looking carefully at your TV screen at just the right time, you'd miss the fact that these ads are brought to you by the American Chemistry Council — an organization that is lobbying on the bill in question. Without the online TV ad files, you'd never know that the American Chemistry Council spent some $250,000 airing the ad.

Hopefully the FCC actually does something and makes these networks obey the law.

Filed Under: pacs, politics, transparency, tv ads
Companies: sunlight foundation

Online Ad Rates Higher On Certain TV Shows Than TV Ad Rates

from the go-simpsons dept

We were just being told by a supposedly respectable media analyst that things like Hulu were anti-American, because it gave away content for "free" and could potentially bring down the entire media business. Yet, it appears that media businesses are learning how to monetize that online content quite well. Bloomberg notes that for shows like The Simpsons and CSI, online ad rates are actually higher than TV ad rates. There are good reasons for this, including the fact that advertisers recognize viewers of shows online are more committed to the shows -- in that they actively chose to seek out and watch that show, as opposed to just having the TV on in the living room while doing something else. Also, people are more willing to watch those ads, in part because they're shorter and they don't have to watch as many to get to the content they want. Now, it is true that the number of viewers still represents a substantial difference and that media companies rely heavily on carriage fees from cable companies and the like. But the idea that ads can't support TV shows online doesn't seem to be based on anything in reality.

Filed Under: csi, online ads, simpsons, tv ads