Snapping The Cable

Today in Tedium: So, I have to start this somewhere, so let’s try this: The cable industry is pretty screwed, isn’t it? There are a lot of potential reasons to come to this conclusion, including the fact that the maverick moguls are mostly gone, replaced largely with big companies looking to maximize their investment by cutting the size of that investment in any way they can. No Ted Turner riding in on a buffalo this time. Instead, we’ve essentially been given something of a death certificate for a model that once was the dominant window through which we viewed culture. And it’s only going to get worse, as more mergers emerge. Just before the break, word spread that Warner Bros. Discovery was trying to merge with Paramount, which sounds like a horrible idea to literally everyone, as highlighted by the quote in this Deadline piece: “Why would any company try to catch a falling knife?” When even the business analysts are rolling their eyes, you know it’s a bad look. So, why is cable so screwed, and can it be fixed? Today’s Tedium ponders the landscape. — Ernie @ Tedium

It’s been a long time since ESPN was small and scrappy.

The first problem with the cable model: Carriage fees

If there was an “original sin” of cable television, it is perhaps the carriage fee, a collective fee that everyone paid on their cable bill to make it possible to share sports with households of millions.

It was an idea born in 1982, the brainchild of then-ESPN CEO Bill Grimes, who saw a problem: He had an immensely promising product, something that a huge chunk of the American public would want—24-hour sports. The problem is, they weren’t getting enough money from cable providers for that offering, and this company, at the time a tiny television startup out of Connecticut, was on the brink of failure.

It had potential, but potential was not enough to avoid bankruptcy.

Providers gave them ten cents per year, per customer, to support their business. Which one could reasonably argue was not enough, given the immense popularity of sports. So Grimes had an idea—put the screws on cable providers, and get them to pay ten cents per month, per customer for this thing they like watching, and because their audience is already full of fervent fans, they’ll do it.

“Operators complained and threatened to drop ESPN. But they knew they couldn’t without the risk of losing subscribers,” a 1988 Los Angeles Times feature explained. “Once ESPN was in homes, it was going to be hard to get it out. And cable operators knew it.”

Carriage fees, on the one hand, made it possible to pay for cable, and it turned the model into a long-term cash cow for lots of channels, not just ESPN. But ESPN was clearly the main beneficiary, because of the lopsided dynamic sports created. Over time, ESPN became by far the most profitable part of the entire Disney empire. It also created a ballooning of growth in professional sports that continues to this day.

But the model clearly evolved from being an essential benefit to a curse on the entire cable industry over time.

As Will Leitch of New York helpfully put it last year:

If you had cable television, you paid ESPN 96 bucks last year even if you never watched a single sporting event. And this system has been in place as long as there’s been cable. Which, well, is one of the reasons there might not be cable very much longer.

Sports are very popular, and it is obvious that they have mainstream appeal. After all, the newspaper, as long as you’ve been alive, has had an entire section dedicated to sports.

The problem is, sports in many ways is a gigantic niche. A mainstream one, a popular one, one that lots of people love. But it’s still a niche, and while lots of people love sports, not everyone does.

Which means that while ESPN is siphoning $96 a year from the average cable bill, most people are not getting $96 of value from that service. A 2020 Variety piece puts it starkly: Around 21 percent of people who subscribe to cable watch ESPN, giving the network just under $8 per month. Two other networks that play a lot of sports, TNT and the NFL Network, get just a quarter of what ESPN does. TNT has a much larger viewership—likely in large part because it doesn’t just air sports all day—but ESPN has the clear advantage.

Meanwhile, networks with relatively large viewership, like AMC and the Paramount Network, receive pennies on the dollar compared to ESPN. (One network that gets a surprisingly large share of the pie: Fox News, which receives $1.72 from every household every month, almost as much as the NFL Network.)

It is pretty obvious that sports are a bad deal for the roughly 80 percent of cable subscribers who don’t regularly watch ESPN, and as the broader culture became less monocultural, people were going to start looking for options that actually fit their interests. And when cable didn’t offer them, they cut the cord.

Of course someone was going to disrupt this model. If it wasn’t Netflix, it was going to be somebody else.

How many times have you seen this famous scene from The Big Bang Theory? Odds are that it’s playing on TBS right now!

The second problem with the cable model: Investment

For all the chatter modern television encourages about prestige programming, the incentive clearly favors continuing to milk the hits. And there’s no better case-in-point for this argument, honestly, than The Big Bang Theory.

There was once a time when TBS’ schedule was relatively weird and diverse, hitting a lot of different marks. But these days, it leans very heavily on just a handful of shows—Friends, Young Sheldon, Modern Family, Family Matters, American Dad, and Big Bang. There are days when TBS airs Big Bang six hours in a row.

There was once a time that TBS was known for weird shows like Starcade. No longer.

Now obviously, these shows are surefire hits, each maintaining ongoing popularity with audiences. But it feels weird to think about this being the network that TBS, the network that gave us exceedingly weird shit like Captain Planet, The Chimp Channel, and Starcade, basically evolved into—a giant dumping ground for endless reruns of already overexposed shows that people could find on streaming whenever they wanted, of shows that the average person as likely already seen every episode of six times.

Part of the reason for this is that these shows are easy money. They’re obviously going to get enough views, and enough advertising, to be a worthwhile investment. But the other factor about this is that Warner Bros. already owns these shows, and has been paying royalties to itself for years. A 2019 deal put the value of Big Bang on HBO Max and TBS at something like $600 million over five years, some of which goes to the creators, but most of which stays within Warner Bros.

(Look on gossip sites, and you’ll read stories about how the leads each make $10 million a year for doing nothing, which explains why you haven’t seen Johnny Galecki in anything in five years.)

Other networks do similar things. TNT, once the home of the never-ending Law & Order rerun, now airs a lot of reliably popular shows like Supernatural and Charmed, along with mainstream movies you’ve most assuredly seen. While Comedy Central still has plenty of originals, it also plows through more Parks & Recreation and The Office reruns than anyone really needs.

Really, MTV bet its entire empire on this guy?

MTV, meanwhile, still relies on a diet of Ridiculousness; the Paramount Network, which has seen so much success with Taylor Sheridan originals, still runs more than its fair share of Bar Rescue.

In another time, they once called this kind of programming “marathons.” But I don’t think anyone was expecting cable channels to make them the entire schedule. (Admittedly, the strike may be one reason cable’s a rerun wasteland, but something tells me it would be like this even without the strike.)

When the streaming era began, it was seen as an opportunity for companies like Warner Bros. to make additional money by selling shows that were under the radar, perhaps giving them a bigger audience. It was an investment opportunity, a way to present these cable shows they were making in a new light. But it feels like the lesson they took from this was not “make more weird stuff you can sell to Netflix,” but “remove all the interesting shows from cable and put them on your own streaming service.”

The evidence is strong that cable television is in late-stage enshittification, where the value prop of the product—originally sold as a high-quality alternative to traditional broadcast—has been replaced by never-ending comfort food. At which point, you might as well just use Pluto TV or something similar to get it for free.

You don’t program six hours of The Big Bang Theory or eight hours of Ridiculousness in a single day if your product is high-quality, or you’re expecting lots of people to watch it.

It’s the bet you make when you’re just trying to fill airtime or rest on your laurels.

If you are old enough that a sign like this was once a common sight for you, odds are you subscribe to cable TV. (Jeremy Brooks/Flickr)

The third problem with the cable model: Generations

Ultimately, the combination of one and two is leading to the third problem: The cable industry has lost its generational pull.

Sure, lots of people send money to Comcast or Cox or Charter every month, but they send it because they want internet service, not because they want cable.

Simply put, by building a product that gradually grew stale and failing to strengthen the product portfolio, the cable industry essentially has ceded the next generation to other mediums.

Sure, there are certain things that won’t fade away quite so easily. TV news and opinion coverage, for one thing, relies to some degree on the immediacy of the news cycle, and tends to draw in an older viewership that is fairly old.

The average age of CNN viewers? 67. Fox News? 68. MSNBC? 71.

To put it another way, the problem is obvious just by looking at those numbers: Newer generations have not come to embrace cable news. Sure, they might view their websites and get the information through other means, but there’s no carriage fee attached to that. The real money comes through other channels, and those are the channels younger consumers no longer use.

This generation gap, really a relevance gap, is showing itself in the content industry’s approach to upfronts, which tend to focus on the most advertising-friendly demographics. In 2022, as Marketing Brew reported, media outlets were highlighting how streaming services had a median age well below its cable equivalent.

If it feels like you’re seeing less good content on basic cable, the reason for that might come down to the fact that cable television, the whole thing, has started to fall out of “the demo” of 18-49 that advertisers prefer. Which sucks if you run a giant media company, because you’re making all your money through cable!

To put it all another way, the combination of charging too much money and choosing not to develop original content for cable television created a vicious cycle, and that cycle means that eventually its entire nonsports target audience is at risk of “aging out.”

And sports is not immune to this shift, either. If you’ve watched a baseball game on Apple TV+ or a football game on Amazon, you’ll know that ESPN is no longer getting all the deals it once did, and that means that even their brick wall of a moat, a dam really, is at risk.

The dam, sooner than later, may just break.