When the upfronts return to New York City in mid-May after a two-year pandemic hiatus, TV broadcasts are expected to play second fiddle. While ABC, NBC and CBS will still get their moments, Disney is expected to introduce the ad-supported tier of Disney+, while Paramount will pitch Paramount+ and tout NBCUniversal Peacock. After years of preparing to go all-in on streaming, linear is no longer a business priority for Hollywood giants.
But at least a handful of companies are bucking the trend and leaning towards linear TV, hoping it can help them stand out in a world where everyone seems to be trying to chase Netflix, which itself is going through a rocky stint as its subscription growth. slows down. “You have to be willing to be a little bit ruthless at times, to challenge certain standards,” said Peter Olsen, the president of ad sales for A+E Networks.
Companies like A+E, Univision, Fox and AMC Networks are betting that, even if the pay TV bundle declines slowly and steadily, embracing the linear side of the business can still be lucrative — helping them bridge the gap between bridge the uncertain present and create a more secure future. “There’s always so much discussion in our company about ‘This is dead, this is new,’” says Olsen. “Things don’t die, they just evolve. And I think we’re approaching this in a very deliberate, down-to-earth, down-to-earth way, which is that yes, traditional distribution is going through a challenging trend, right? But… there’s still a way to reach people through creative distribution partnerships and stuff.”
The future of Linear TV is hard to predict and no company is willing to make big statements just to investigate questions. “Older viewers may be cutting the cord, but younger people are increasingly asking, ‘What is a cord?’ MoffettNathanson analyst Michael Nathanson joked in a report in March.
A March 4 SEC filing from Discovery Inc. prior to the merger with WarnerMedia, however, sheds some light on the near to medium term of pay-TV. The filing indicated that Discovery expects revenues from its U.S. linear TV business (Food Network, Discovery Channel, HGTV, etc.) to decline 4 percent annually through 2025, with costs expected to rise. At WarnerMedia, domestic linear revenues are expected to fall only 2 percent a year through 2025, perhaps benefiting from that company’s portfolio of sports rights, which include NBA, MLB and March Madness basketball.
Sports remain one of the main drivers of linear TV, even as companies like NBCUniversal and Disney experiment with streaming more live events, and Warner Bros. Discovery offers the opportunity to do this in the future.
Fox Corp. CEO Lachlan Murdoch noted at his company’s annual meeting in November that the trends made Fox “more valuable to the cable bundle because what people watch on cable is live news and live sports,” he said. “Our assets are more valuable in that bundle and over time we will get a greater share of the cable rates that we can get from our distributors.”
“Non-live watched time has fallen off a cliff, averaging -8% per year over the past 10 years,” Nathanson writes in his linear TV report. “However, the live time being viewed is flat, despite there being several million fewer Pay TV houses. Sports, and to a lesser extent news, is where Pay TV will continue to differentiate itself and find a lifeline.”
But many companies bet there’s more than just sports and news. In fact, they believe that strategic moves by many of the industry’s largest companies could benefit smaller, nimble players.
A crucial theme: The giants exploring the video-on-demand subscription space are actively making their linear channels less valuable by taking some of their best entertainment fare and making it exclusive to their streaming services.
On April 8, Disney announced that: Dancing with the stars, an ABC reality staple (and a favorite of marketers looking for a family-friendly show with scale) is set to move exclusively to Disney+ later this year, right around when the streamer’s ad-supported tier is due to debut. Paramount also makes his Yellowstone spin-offs exclusive to Paramount+, while NBCUniversal’s Fresh Prince Of Bel Air reboot is exclusive to Peacock. For these companies, the best content is increasingly being streamed alone.
“The big consolidation trend has arguably given people the scale to have robust streaming services, or subscriptions, or a mix, and the people who have those scaled subscription services are pushing it hard,” said Kevin Krim, CEO of the ad technology and analytics firm EDO. “And the ones that aren’t that big have to live with what they have, which is still strong linear networks with an audience.”
And paradoxically, that can help amplify competitors’ linear movements. “Discovery pulling content to go straight to their streaming platform creates an opportunity,” says Olsen, pointing out that A+E is aggressively moving into food TV. “So you look for those opportunities, you find those whitespaces and say, you know what, we can work our way through this.”
In some ways, NBCUniversal’s all-in push, Warner Bros. Discovery, Paramount and Disney are streaming new windows for businesses that don’t have the same scale, especially around maximizing their revenues through their linear audiences.
That’s not to say these companies are ignoring streaming. They’re all in that sandbox, to varying degrees. AMC has an SVOD service called AMC+, and a range of free ad-supported streaming channels (called FAST channels in the jargon – some apps, some channels within streaming services, but all free and ad-supported). A+E has its own share of FAST channels and makes deals to sell its content to other streamers. Fox owns the Tubi FAST service and has a niche subscription with Fox Nation.
The bet is that as long as the programming is super high quality, audiences will watch it, whether it’s on a FAST channel or, yes, linear TV. “We’re an original content company, we’re not known for showing iterations of other people’s stuff, so if you create your own stuff, own your own stuff, it gives you maximum flexibility to use it linearly and then on any platform how your customers want it to be used,” said Rob Sharenow, president of programming, A+E Networks.
New technology, like addressable ads, bringing the targeting capabilities of digital ads to TV can make linear TV more like streaming, only making it a better option for marketers looking for both scale and specificity. “I feel like television is becoming much more exciting, much more dynamic, and more efficient,” said Kim Kelleher, president of ad sales at AMC Networks.
In fact, the linear audience still benefits from a watercooler effect of live TV, which persists even with decreasing beam, but becomes increasingly difficult.
“There’s still a community aspect to watching something live the same day,” Kelleher says. “You see Twitter explode, and it’s not just scripted dramas, we see it with our Love after Lockup series. It’s fun, you feel like you belong in a bar full of people enjoying the same moment, the same joy, the same indignation.”
But linear, in a sense, is the glue that binds it together, and these “contrary” companies, to use Olsen’s phrasing, think they can remain not just viable businesses, but downright compelling businesses for the foreseeable future. Kelleher adds, “It’s an adventure where you make your own choice from the viewer’s point of view, and many of our viewers are still subscribed to the cable.”
A version of this story first appeared in the April 27 issue of The Hollywood Reporter magazine. Click here to subscribe.