Saturday, November 8, 2008

Broadcast News Blues

The 2008 presidential election made history as for the first time America elected an African American to be president. It also made history as a cable news organization drew more viewers election night than any of its long established broadcast news competitors.

Nearly 80 million viewers tuned in to television election night, about 20 million more than election night 2004. In "extended coverage," from 8:00pm to 12:30am, CNN had 13.3 million viewers, about eighty thousand more than second place finisher ABC News, and about a million more viewers than NBC News. In fact, CNN nearly doubled CBS News in viewers. The three broadcast networks combined drew nearly 32 million viewers, just 4 million more that the top three cable news networks.

Because of their entertainment programming commitments, the broadcast networks provide much less news each day, and only interrupt regular programming for major breaking news. News viewers have been increasingly reliant on cable news as their first choice for news any time of day. Consequently, brand loyalties are shifting from the established broadcast news networks to cable news outlets.

The resurgence of CNN, the emergence of the Fox News Channel and the recent growth of MSNBC, have all increased viewer awareness and sampling for these cable outlets. The 2008 elections have, so to speak, lifted all cable news boats, giving CNN a big boost while conservative news junkies flocked to Fox and liberals turned to MSNBC. The Fox News Channel and CNN each drew the largest audience for one of the three presidential debates. No doubt post election news viewing will recede, but combined cable news audiences are certain to settle in at a new higher level.

Ted Turner's old mantra was that the "news is the star." No more. Today cable news is driven largely by brash personalities unabashedly expressing their views and opinions. Of course, there are exceptions. Nonetheless, many cable news anchors are viewed as super stars and mentioned on a par with their broadcast news counterparts.

Cable news organizations derive revenues from commercials and "sub fees," a dual stream, so even a couple million viewers are lucrative. While the evening newscasts each typically draw six to eight million viewers, they only get revenues from one source of revenue, commercials. Advertising rates have decreased because there is so much news programming and inventory available for the audience. Also news audiences are made up of older viewers, which are less desirable for advertisers to reach. Finally, given the economic climate, companies are sharply reducing their advertising budgets. Cost pressures are likely to fall disproportionately hard on broadcasters.

Morning news programs are lucrative. NBC's Today Show makes an enormous amount of money which helps to underwrite general news division costs. ABC's Good Morning America and CBS's Early Show each are very profitable, but to a lesser extent. Morning television has been the only time period to show viewer growth. Nonetheless, the advertising contraction will impact even these programs, and the cable news networks are aggressively going after market share in the morning.

Viewership of the evening newscasts on the broadcast networks continues to decline. NBC has the benefit of both a broadcast and a cable news network, MSNBC. They have worked aggressively to integrate operations to be more efficient and effective and have focused a lot on the Internet. The ABC and CBS news divisions do not have a cable news operation to share costs with so they are in a much more difficult position. And their Internet efforts have not been very profitable so far.

Next year a new president will be sworn in and he has pledged to take us in a new direction. Change is coming. But today, broadcast news organizations are already re-examining their strategy, vision and business models. Change is coming.

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