The Reports of My Death Were Greatly Exaggerated
Yesterday, the media industry gleefully lit itself on fire.
From CNN (“BuzzFeed buzzkill”) to Vanity Fair (“Is This the Beginning of the End of the Millennial Media Bubble?”) to Fortune (“Another ominous sign for digital media”), it appeared that journalists were happy to trample over themselves to vociferously declare The End of All Things.
In the technology markets, things move pretty fast. Changes in hardware, software, distribution channels, consumer preferences and consumption formats may in fact be accelerating. When things moves fast, people often get stuff wrong, especially those on the “outside looking in.” It’s fun to look back in time and read about the impending bankruptcy of Netflix (“Everyone’s piling on and raving about how stupid the company is”) and why Facebook couldn’t build a mobile advertising business (“Facebook has a business model in need of a radical change and a still-rich $61 billion market value”). One of my all-time favorite quotes, attributable to George McPhee, the ex-general manager of the Washington Capitals NHL team, was that if so-called experts and pundits, “knew anything about the game, they’d be in it.”
It’s tough to make predictions, especially about the future. Data and facts suggest that we are at an inflection point as it relates to the shift in media consumption away from print and linear television to digital and mobile. The millennial generational cohort does not read newspapers on a regular basis. Younger age cohorts are increasingly watching less and less television. The median age for CNN viewers this year was 61, while it was 63 for MSNBC and 67 for Fox News. While many are eager to hand over the full value of these audiences and revenue models to Facebook, the reality is that Facebook needs professional content to sustain user engagement and fill our NewsFeed with (quality) Live content. It seems unlikely that over the long-term, Facebook and other digital distributors will operate in a way that does not allow quality content producers to flourish; particularly as alternate platforms like Snapchat and Kik are growing in attention and importance.
So, yes, it’s tough to make predictions, especially about the future. We can more easily learn from the past. There are many parallels (and many differences) between the rise of the U.S. cable television industry and that sea change in content distribution and consumption and what is happening today in the digital and mobile ecosystems. In perhaps the best book on the history of the cable industry, Cable Cowboy, author Mark Robichaux notes that in the early 1980s, “despite the explosion of new content most operators of cable systems paid little attention to programming; it was merely a commodity that brought in new viewers, not a value chain all its own.” Sound familiar? By 1987, television advertising revenue for cable channels topped $1 billion, channels began successfully demanding a piece of subscriber fees and multi-billion dollar content brands like ESPN, CNN and Discovery were truly born.
Our view is that it is indeed a terrific and exciting time to be in digital content. Our view is that the ongoing digital transition will continue to create tremendous opportunity for digital and mobile-first media organizations — from “legacy” publishers to the newest innovators and entrepreneurs. Our view is that owning and consistently producing great content has always created defensible value and the value of great content and great brands is only amplified in a world where consumer attention is more fragmented than ever. Our view is that reach and engagement will always be valuable to advertisers. Our view is that there always has been, and always will be, a balance of leverage between distributors and content owners. Our view is that leading media companies run by innovate and visionary leaders with amazing teams, many in which we are proud shareholders, will create tremendous value for many years for consumers, advertisers and shareholders.