Disruption Is A Bitch, WBD Stops The Bleeding But WTF CNN?

1. Disruption Is A Bitch

The first job I ever had in advertising, my boss lived in the Dakota.

She was a creative director who’d started out at the tail end of the Mad Men era and while Upper West Side real estate was not at the level it is today, she, like most senior creatives of that period, made a very healthy salary.

It was something to aspire to.

But then the internet happened and digital agencies became a thing. (Razorfish anyone?) And the thing was that there wasn’t a whole lot of creativity involved in making an effective banner ad. 

Media planners, long the abused stepchildren of the agency world, became the golden boys and girls, as where those banner ads ran and who they were targeted to, became far more important than what they actually looked like or said.

While agencies were still making TV commercials, the concurrent death of the monoculture made them far less prestigious; far less relevant than the number of digital clicks. 

Print ads, long the medium that distinguished one creative agency from the next, went the way of the 8-track. And while there were still plenty of creative director jobs, the pay dropped precipitously in tandem with their prestige.

So what had once been a very competitive job market became decidedly less so.

Because you see, the thing about creative jobs is that without that proverbial pot of gold at the end of the rainbow, they become a whole lot less attractive. The juice just isn’t worth the squeeze.

If you hadn’t figured it out by now, I’m talking about the WGA strike and the way that Hollywood has been disrupted by the streaming era.

And how, while the Guild’s demands are all quite valid, the genie isn’t going to fit back into the bottle and the industry needs to figure out how to deal with this new reality.

Why It Matters

It is no coincidence that the second Golden Age of television began shortly after the passage of the Cable Act of 1992.

That law created the system of carriage and retrans fees that put tens of billions of dollars into the networks’ coffers each year.

Funds that were then distributed throughout the ecosystem.

Perhaps not always equitably, but in a way that significantly impacted everything from the food at the craft services tables to the amount of take home pay.

For writers, those numbers were further increased by the growth of television in other parts of the world, where, as more people joined the middle class, they could afford to watch TV. Which made overseas syndication more valuable than ever before.

But it’s all coming to an end.

And if the timing feels off, it’s because it’s happening a good 20 years after the music and publishing industries were disrupted by the internet. TV has always been a much bigger tangle than either of those industries, so it took longer to disrupt.

Yes, there are things the networks and streaming services can do to make life better for WGA members.

But there are many things they can’t do.

They can’t make 25-episode seasons profitable on streaming. They can’t stop shows produced outside the US from being shown on US television. They can’t stop the march of AI.

And they can’t recreate those billions in carriage and retrans fees.

What they can do though, is figure out a way to keep the best and the brightest working on TV shows. To make it so that writers, actors, directors and producers are not as subject to the vicissitudes of the gig economy.

Because if they don’t do that, then top talent will go elsewhere and everyone will lose. 

It really is that simple.

What You Need To Do About It

If you are one of the networks or streaming services, you need to get together with your peers and figure out a way to make writing TV series an attractive option for the next generation of talent.

Because if being a television writer means a lifetime of scrambling and scraping for not all that much money, only to find yourself washed up by age 40, that’s not something a whole lot of people are going to take you up on.

Which means that the shows you air are not going to be all that good.

Which means that people will find something else to do with their spare time.

Which means that you will lose money.

I can’t lay it out any more simply than that. 

If you’re the WGA, bear in mind that the aforementioned genie can’t go back into the bottle and focus on improving things in the world ahead, not recreating the one you left behind. Without the artificial bump created by carriage and retrans fees streaming will never be as profitable as linear was over the past 30 years and that’s just a fact.

2. WBD Stops The Bleeding But WTF CNN

During their latest earnings call, WBD CEO Dave Zaslav announced that their streaming operation is “no longer bleeding” and in fact had posted a $50M profit for Q1 2023.

Not that they were suddenly going to start minting money off of it, but rather, it was not continually providing a downward pull on their bottom line.

This is key in that many of their competitors have not made it out of the red yet, relying on things like theme parks to provide profits.

Now to arrive at this place of positive cash flow, WBD has had to make a number of fairly dramatic cuts.

Partly (or maybe even largely) because AT&T had so royally fucked up the business. 

But also because they seem to realize that without carriage and retrans fees, streaming does not have the rosy economics of linear. And that cuts did indeed need to be made.

Then there is CNN, which is the toughest nut of all, one where Zaslav et al need to walk an increasingly tight line.

Why It Matters

The decision to immediately close down CNN+ just a few weeks after it launched may have shocked the industry’s digital denizens, as launching the new app seemed like such a clever idea.

But (and I am projecting here) WBD’s new management understood the value of cable news networks to the MVPDs, who saw them as one of the few things between them and an actual “massive wave of cord cutting.”

Meaning they were willing to pay massive carriage fees for it.

A nascent CNN+ would have made them far less willing to pay those hefty fees, and the revenue from CNN+ would not come anywhere close to replacing it.

Thus the decision to shutter the streaming news service, eat whatever costs were associated with that decision and to keep milking CNN’s deals with the MVPDs for as many years as possible.

They also seemed to get that cable news is a dying business. Because cable TV is a dying business. And that CNN, which had become somewhat politicized in response to Fox News becoming very politicized, was losing its audience and trailing in the ratings.

Let’s just pause there for a minute.

The ratings. As in the overnight Nielsen ratings. That thing that everyone during this upfront week will tell you no longer matters.

Except of course on cable news, where it 100% matters.

So CNN needed to reinvent itself and so, allegedly upon the advice of Republican investor John Malone, it set out to become a more balanced version of its former self, with “more balanced” meaning a form of both-sidesism of the sort the brilliant New York Times Pitchbot loves to mock.

Which inevitably led to the lesson, learned during Wednesday night’s Town Hall, that when you try and please everyone you wind up pleasing no one.

Lesson hopefully learned.

It’s also worth noting that while CNN did win the aforementioned ratings war (see chart) much has been made of the fact that the ratings were still lower than they had been for similar Town Halls in 2015. Which seemed to completely miss the fact that pay TV subscriptions dropped 26% over the past eight years, from 94.9 million in 2015 to 70.2 million in 2023.

Because cable TV, as noted above, is slowly dying.

What You Need To Do About It

If you’re WBD, keep doing what you are doing in terms of reining streaming costs in while milking those carriage fees for as long as you possibly can. Given the position you inherited, austerity really was the only way forward.

That said, the road forward for CNN seems to lie in a different direction. The Charles Barkley/Gayle King thing seems like a smart move—people have all sorts of free sources to get the actual news in far greater depth if they’re actually interested. 

My gut says most are not, save for really big events like elections and Russian invasions. So more Charles and Gayle, less out of control Town Halls.

Finally, if you are one of the other streaming services, this sort of cost-cutting is likely your future too. Maybe not quite so dramatic—you didn’t have AT&T working its magic beforehand, but still enough that you should probably watch and learn.