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Financial 411: Television News and the Changing Media Landscape

Tuesday, September 07, 2010

Markets gave ground today, the Dow losing more than 100 points to close at 10,341. Worries about European banks and European debt dented investor confidence, causing declines in the the Nasdaq and the S&P 500 of more than 1 percent each.

President Barack Obama is touting his new $50 billion transit infrastructure plan as a way to kick start the economy. And the White House says the president will unveil a host of other measures to spur job creation and help businesses, including a request that Congress allow businesses to quickly write off 100 percent of their capital spending  through 2011. Many observers feel it's unlikely Congress will pass this plan before the November elections.

The State of Television News

ABC News President David Westin announced he'll step down at the end of this year. He revealed the news to employees in an e-mail. He says he's ready to pursue other professional opportunities.

Westin leaves the news division, located on New York's Upper West Side, after leading it for nearly 14 years. Recently, the network went through some dramatic changes, hiring new anchors for nearly every program and cutting the workforce by 25 percent. Westin's departure comes at a time when many of the network and cable news outlets have been struggling with a combination of declining viewers and ad dollars.

Marisa Guthrie, programming editor at Broadcast & Cable, and Andrew Tyndall, publisher of the tyndallreport.com, which tracks the networks' nightly newscasts, talk about the state of television news.

Marisa, let me start with you. It sounds like David Westin is leaving because of budget pressures. Am I right?

That's what we're hearing from people at ABC, although the company line is that's not the reason, he's just ready to move on. But I think you can look at the tea leaves and see that the network news business is extremely challenged and profit margins these days are slim to none.   

Put his departure into a broader context: What is the situation at other network and cable news divisions like CBS, CNN and NBC?

The proliferation of media in general has taken away the purse that these network news divisions used to have, which meant that they could get plenty of ad revenue to support all of the big anchor salaries, and the cost of actually gathering the news. That's no longer true. Their viewership has declined and their ad revenue has declined with it. And the recession certainly hastened the decline of the ad revenue, putting them in even more dire straits.  

Andrew, you have been pretty down on the TV news divisions. In fact, you've said "there will be no broadcast television in 10 years." That sounds a bit severe. What has changed about the business of TV news to make you say that?

I don't use the word television anymore to describe what we see on that box. I think the appropriate word nowadays is video, and that's the important thing. These organizations that used to produce visual images of the news, to be seen on one medium, on broadcast television, have now got to learn to produce it for multiple media, television just being one of them. But also on your computer screen, or on your cell phone, or on your iPad, or wherever you're going to get moving images. We're now in a video world, not in a television world.          

Aren't they doing that? Isn't this the next phase? Is this what's going to save these news divisions -- online news?


We're in the middle of the conversion at the moment, we haven't got there yet. NBC, of all the broadcast networks, made the correct decision, in seeing that cable news would be a perfect stepping-stone from going to broadcast only to going to multimedia. ABC's problem and CBS's problem has always been -- has been for the last 15 years -- that they didn't have a cable string to their bow. They had to rely on broadcast only. And the budget cuts that Marisa was talking about are a direct consequence of relying solely on broadcast revenue streams rather than multiple revenue streams.   

Marisa, the nightly news programs still pull in nearly 20 million viewers combined. Sarah Palin introduced herself to America on ABC and CBS nightly news. George W. Bush is basically launching his book on an NBC news program. So doesn't that indicate there's still an audience for these programs?

There is still an audience, the problem is that audience is old, and so that audience doesn't command the higher ad rates that younger audiences that watch things like, oh, "Jersey Shore" command, unfortunately. And yes, the news divisions are still very important. They still perform a public service, but unfortunately, in a corporation, you cannot exist by just performing a public service. And news gathering is extremely expensive. They're still very important to the public dialogue, to democracy, to the dissemination of information, but they're no longer the only game in town, and that's the problem that they're facing.

Guests:

Marisa Guthrie and Andrew Tyndall

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