When the upfronts return to New York City in mid-May after a two-year pandemic hiatus, broadcast TV is expected to play second fiddle. Though 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 NBCUniversal touts Peacock. After years of preparing to go all in on streaming, linear is no longer a corporate priority for Hollywood giants.
But at least a handful of companies are bucking the trend and leaning into linear TV, hoping that it can help them stand out in a world where everyone else seems to be trying to chase Netflix, which is itself undergoing a rocky period as its subscription growth slows. “You have to be willing to be a bit of a contrarian at times, to challenge some norms,” says Peter Olsen, the president of ad sales for A+E Networks.
Companies like A+E, Univision, Fox and AMC Networks are betting that, even as the pay TV bundle keeps slowly and steadily declining, embracing the linear side of the business can still be lucrative — and help them bridge the gap between the uncertain present and a more sure-footed future. “There is always so much discussion in our business about ‘This is dead, this is new,’” Olsen says. “Things don’t die, they just evolve. And I think what we are doing is taking a very measured, sober, level-headed approach to this, which is that yes, traditional distribution is on a challenging trend, right? But… there is still a way to reach people through creative distribution partnerships and all of that.”
Linear TV’s future is difficult to predict, and no company is willing to make any grand pronouncements, only to explore questions. “Older viewers may be cutting the cord, but younger folks are increasingly asking, ‘What is a cord?’ ” quipped MoffettNathanson analyst Michael Nathanson in a report in March.
However, a March 4 SEC filing from Discovery Inc. ahead of its merger with WarnerMedia does shed some light on the near- to mid-term future of pay TV. The filing indicated that Discovery expects revenue from its U.S. linear TV business (Food Network, Discovery Channel, HGTV, etc.) to decline by 4 percent annually through 2025, with expenses expected to rise. At WarnerMedia, domestic linear revenue is only expected to fall by 2 percent annually through 2025, perhaps benefitting from that company’s portfolio of sports rights, including the NBA, MLB and March Madness basketball.
Sports remain one of the key drivers of linear TV, even as companies like NBCUniversal and Disney experiment with streaming more live events, and with Warner Bros. Discovery holding the option to do so in the future.
Fox Corp. CEO Lachlan Murdoch noted at his company’s annual meeting in November that the trends were making Fox “more valuable to the cable bundle, because what people are watching on cable is live news and live sports,” he said. “Our assets are more valuable in that bundle, and we will over time garner a higher share of the cable fees that we can take from our distributors.”
“Non-live time viewed has fallen off a cliff, falling on average -8% annually over the past 10 years,” Nathanson writes in his linear TV report. “Live time viewed, however, is flat despite there being several million fewer Pay TV homes out there. Sports, and to a lesser extent news, is where Pay TV continues to distinguish itself and will continue to find a lifeline.”
But many companies are betting that there’s more to it than just sports and news. In fact, they think that strategic moves made by many of the biggest companies in the sector could work to the advantage of smaller, more nimble players.
A critical theme: The giants exploring the subscription video on-demand 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) would move exclusively to Disney+ later this year, right around when the streamer’s ad-backed tier should debut. Paramount, likewise, is making its Yellowstone spinoffs exclusive to Paramount+, while NBCUniversal’s Fresh Prince of Bel-Air reboot is a Peacock exclusive. For these companies, the best content is increasingly streaming only.
“The big consolidation trend has given people arguably the scale to have robust streaming services, or subscriptions, or a blend, and the people who have those scaled subscription services are pushing it hard,” says Kevin Krim, CEO of the advertising technology and analytics firm EDO. “And the ones that aren’t as big have to live with what they have got, which is still-strong linear networks that have an audience.”
And paradoxically, that can help to bolster the linear moves made by competitors. “Discovery pulling some content to go right to their streaming platform is creating an opportunity,” Olsen says, noting that A+E is moving into food TV in an aggressive way. “So you look for those opportunities, you find those whitespaces and say, you know what, we can nudge our way into this.”
In some ways, the all-in pushes by NBCUniversal, Warner Bros. Discovery, Paramount and Disney into streaming create new windows for companies that don’t have the same scale, particularly around maximizing their revenue through their linear audiences.
That’s not to say that these companies are ignoring streaming. All are in that sandbox, to varying degrees. AMC has an SVOD service called AMC+, and a suite of free, ad-supported streaming channels (called FAST channels in industry jargon — some apps, some channels inside streaming services, but all free and ad-supported). A+E has its own share of FAST channels and strikes deals to sell its content to other streamers. Fox owns the Tubi FAST service and has a niche subscription offering with Fox Nation.
The bet is that as long as the programming is super high-quality, audiences will watch it, whether on a FAST channel or, yes, on linear TV. “We are an original content company, we are not known for showing reruns of other people’s stuff, so when you make your own stuff, own your own stuff, it gives you maximum flexibility to use it on linear and then use it on any platform in any way your clients want it to be used,” A+E Networks president of programming Rob Sharenow says.
New technology like addressable ads, which bring the targeting capabilities of digital ads to TV, can make linear TV a little more like streaming, only making it a better option for marketers seeking both scale and specificity. “I feel like television is becoming much more exciting, much more dynamic, much more efficient,” says Kim Kelleher, president of ad sales for AMC Networks.
Even better, the linear audience still benefits from a watercooler effect of live TV, which persists even amid a declining bundle, but which is becoming harder to come by.
“There is still a community aspect to viewing something same day live,” says Kelleher. “You watch Twitter blow up, and it isn’t just scripted dramas, we see it with our Love After Lockup series. It is fun, you feel like you are part of something, like you are in a bar full of people who are enjoying the same moment, the same joy, the same outrage.”
But linear is in some ways the glue that binds it together, and these “contrarian” companies, to use Olsen’s phrasing, think that they can remain not just viable businesses, but flat-out compelling businesses, for the foreseeable future. Kelleher adds: “It’s a choose-your-own adventure from a viewer’s standpoint, and a lot of our viewers are still subscribed to cable.” The Hollywood Reporter