Published: August 15, 2024

Linear television is deteriorating faster than expected

By Movieguide® Contributor

The 2024 quarterly reports show that linear television is in a difficult situation, with several studios reporting catastrophic losses in the business.

“Cable networks are in this terrible, ongoing, never-ending decline,” said Jessica Reif Ehrlich of Bank of America. “I think it’s worse than almost anyone expected. Even two years ago, when the writing was on the wall, we thought it would go slower than it actually did.”

Last week, Warner Bros. Discovery (WBD) reported a $9 billion loss in linear television, while Paramount Global suffered a $6 billion loss in cable. The situation was so bad for Paramount that the company announced the closure of its television studio – but CBS will remain open and will carry Paramount Television’s successful shows, such as REACHER.

This rapid deterioration is due to a double revenue decline as cable TV loses both subscribers and advertising dollars, largely due to the introduction of ad-supported TV on all major streaming sites since early 2023.

“Cable TV has been losing customers for the past few years, and we see no signs of improvement. But the increased challenge of advertising on U.S. TV has taken the pressure to a new level, with both revenue streams now working against you,” said Robert Fishman, senior analyst at Moffett Nathanson.

“That’s forcing these linear cable networks to really figure out what their future looks like from a financial perspective, given the challenges they’re facing in the broader ecosystem and what that means for their revenue. So they’re being forced to essentially cut spending to mitigate that pressure, or at least try to mitigate some of it.”

Linear TV’s savior to date – live sports – is also about to go digital with the Disney-Fox-WBD Venu package launching this fall. Priced at $42.99 for 14 live sports channels, this could be the final nail in the coffin, removing television’s last pillar of strength.

However, experts believe that linear television will never truly die out, even if it is relegated to a secondary form of entertainment like radio. However, it is predicted that the landscape of the business will undergo a radical change that will end with the medium being consolidated under one or two companies that control all of linear television.

Given the pressures the industry is currently facing, experts believe this model is the only way for linear TV companies to make a profit in the long run.

“If you combine a lot of cable networks, I think you can save on corporate overheads. You can get rid of duplicate advertising functions and distribution, which cause a lot of costs when combined. A merger could bring in money,” said Reif Ehrlich.

“I think all companies will try to explore different opportunities, but it remains to be seen how much market interest there is in some of these smaller cable networks and how much willingness there is from outside investors to value these assets,” Fishman added.

Movieguide® previously reported:

As Americans increasingly turn away from cable and broadcast television, advertisers are reducing their spending on linear television advertising and investing more in reaching consumers through digital media.

2024 is expected to be the first year that advertisers spend more money on digital media – including social media advertising and advertising on streaming services – than on linear TV. This represents a significant shift in the industry that began in 2020. That year, marketers spent just 29% of their money on digital media and spent the other 71% on linear TV. This year, digital is expected to account for 52% of the money spent on advertising, surpassing linear TV at 48%.

The rise in digital media ad spending comes as consumers spend more time on social media and streaming, the latter of which has opened up more opportunities for the marketing industry over the past year and a half as every major streamer has introduced an ad-supported subscription tier.

Streaming and social media also offer marketers more bang for their buck by allowing them to target consumers more precisely. A recent study found that ads shown on YouTube are twice as effective with consumers as on any other platform, including television, due to better targeting.

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