Last week, David Garrick at The San Diego Union-Tribune pointed out an impartial perspective on the decline of cable TV subscriptions. Cities have reported decreases in their franchise fees, which are typically set at a fixed percentage of cable systems’ revenues. For example, the city of San Diego has seen cable franchise fees drop 12.2 percent over the past two years, an annual loss of over $2 million.
Some cities have contemplated adding a tax on internet-delivered pay-TV, but Garrick couldn’t find any that had implemented it. Do cities get a franchise fee from internet service providers? It seems to me that would fix the problem.
Coming at it from another direction is my favorite pundit, Shelly Palmer. He wrote yesterday that TV has a problem coming from the other direction – its advertisers. Network ad sales groups are trying to whip up data-driven metrics to repackage their shows to attract ad buyers in ways the Nielsen ratings don’t. “Of course, the pressure on TV ad sales is not Nielsen’s fault,” Palmer wrote. “The blame can be placed squarely on changes in consumer behavior.”
Put another way, companies that buy ads don’t really want ads, they want results, either sales or an increase in brand awareness. The truly data-driven future is when these companies can track each outcome and pay the TV intermediary accordingly.
As always, Palmer sticks the dismount. “TV, the art form, is in its platinum age. But the
future present of video packaging and distribution is on-demand and digital. TV the platform simply cannot survive under its current business model. It must evolve.” I would add that the natural benefits of free broadcast TV (ubiquity, attractive price, one-to-many bandwidth usage) should keep it in the mix in the decades to come, although its evolved form has yet to be unveiled.