Post Cable Network Part II: An Update

In the time since we invented the term “Post Cable Network” (PCN), VC inboxes have been filled with PCN pitches. When I bounced the category name off Sam Landman , we felt as if we had coined a pretty good term, but our expectations for capturing a budding category have clearly been exceeded.

[Side note: we had been looking for a category name to define us for weeks. Like all good ideas and a bolt of lightening, “PCN” hit me when I was on my phone with Sam on the way back from the gym, sweaty, at 7am.]

Live Sports and News

A lot of people tell me they want to make a PCN for sports — an ESPN killer. I think Barstool has a lead here, and CBS plans to introduce one as well .With that said, we are increasingly seeing Live Sports and News as the key formats that require tune-in based channels.

You can’t be a PCN for dramas and comedies. Dramas and comedies will just be watched on Netflix, HBO, and Amazon. To be a PCN, you need to create a platform that people seek out to see “what’s happening right now” in a given topic or genre that requires live.

Or as Deutsche Bank recently put it when discussing reports of Amazon’s desire to buy small cable channels:

…Networks where the brand and the content are integrated with one another (e.g. HGTV, Food Network, Discovery, Investigation Discovery, Animal Planet) have a future even in an on-demand, Netflix-like world.

News and sports are the key PCN candidates, but I am starting to thing that food/home/culture can have a PCN as well — a sort of millennial mashup of Food Network and HGTV. We are actually working on that for our second or third PCN that we will launch on 2018. My dream would be to do a live Tiny House renovation.

A lot of people with big web sites want to become PCNs. They approach many platforms we are on and say:

“We want a channel like Cheddar.”

To which most distributors respond,

“Oh, do you have 8 going to 10 live hours of programming like Cheddar.” To which these sites respond, “We make five 2-minute Facebook videos a day, isn’t that enough?”

The answer, is “no.”

In the news category, The Young Turks is a PCN. After Barstool and Turks it becomes hard for me to name other new media companies that are producing enough in volume and style of content to be positioned to be a PCN.

The Past 3 Weeks

The past three weeks have been one of the most dramatically negative periods for incumbent media and consequentially opportunity opening periods for new entrants.

We are seeing cord-nevering and cord cutting ramp so rapidly that ad forecasts have been taken down and the road to 80 million non-cord-people is now on the horizon:

[Cord cutting is a misnomer. These people keep broadband and cut or forgo their video channel packages.]

Comcast pre-announced a loss of 100,000 to 150,000 video subscribers (the floods only explain a portion of these losses), 5 major magazine editors how now retired, and even NFL ratings were down substantially (14%) for the first week.

At the Same Time

At the same time, everyone is buying Rokus.

When not watching 5 episodes of Ozark, people are going to want to watch something, live on these boxes to see “what’s happening in the world.” That’s what PCNs do.

And a recent Pew report further evidences the shift to PCNs : “37% of the younger adults who prefer watching the news over reading it cite the web, not television, as their platform of choice.”

Just like Newspapers to Websites

Some of the incumbent cable channels will make their way to this new world. Just as incumbent print newspapers like The New York Times and 
The Washington Post built leading web sites, many cable channels will “cross the chasm” to becoming PCNs.

Just like many newspapers did not make it to web success, and new pure plays entered, we will see the same dynamic in PCNs.

Cable systems like Comcast and skinny bundles like Sling are increasingly recognizing they don’t need to give into the high priced demands of cable networks and can substitute in PCNs. The first wave of these negotiations resulting in dumping of incumbents will likely happen in the next 12–24 months. The cable systems (MVPDs) are realizing that as long as they provide good broadband, every channel is substitutable or droppable.

Given everything laid out above, and the MVPD pricing pressure dynamic, I expect the PCN switchover to NOW accelerate rapidly over the next year or two.